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How Japan's Decline in Birth Rate Will Effect the Country Essay

Decent Essays
With the country’s current birth rate, Japan’s population of 127.5 million is expected to decrease by 25% within 35 years. The slowly shrinking country is also met with the problem that its population is also the oldest in the world, with over 25% of residents over the age of 65. These two facts combine to make a very unique and awkward situation in Japan in which no other country has ever been in before. Many changes are expected to occur in Japan, and efforts are being made to maintain the country’s economy, however its unclear if enough efforts are being made. I predict that In the future, Japan’s economy will be affected by its both declining and aging population, and certain government reforms are necessary to fix the population…show more content…
The lower amount of people provides both the smaller labor force as well as a smaller domestic market. With a smaller labor force, less goods for the international market will be reduced, risking Japan’s spot as number three in the world economy. Although the domestic market is shrinking in size, this does not mean that Japan’s gross domestic product, the value of a country’s goods and services provided in a year, has shrunk. In fact, Japan’s gross domestic product increased by 1.9% last year, nevertheless this increase is less than half of the increase seen in the previous year (Tseng).
The steadily decreasing population of Japan does, however, provide much more for the individual Japanese citizen. William Cline of the Peterson Institute for International Economics stated that: “Thanks to a falling population, individual income has risen strongly...” With their increased income, Japanese spend more money on domestics goods and services, resulting in the still rising gross domestic product despite having a declining population. The eldest of Japan, retirees, will probably take the hardest punishment from a declining population in the years to come. With the ratio of elderly to youth set to increase steadily over the few decades, the amount of taxpayers paying for the government funded pension program simply will not be able to pay for the needs of the elderly in Japan(Traphagan).
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