Japan’s shrinking working-age population is a constant drag on economic growth. Unfortunately, policy measures that might help to stabilise the population would have substantial fiscal costs, which Japan would struggle to afford. And most people in Japan oppose large-scale immigration. The upshot is that the government’s target of stabilising the population at 100 million by 2060 will likely be missed. Potential growth will therefore remain meagre, and the funding of pensions will become an increasing challenge.
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