Japan has slipped into recession less than two years after the last
Japan has slipped into recession less than two years after the last one. With the country’s debt rising, population aging and job security fading, young people in particular wonder when, and if, Japan will bounce back.
Under pressure to reduce the developed world’s heaviest per-capita debt burden, at over a quadrillion yen ($8.5 trillion), Prime Minister Shinzo Abe raised the sales tax from 5 percent to 8 percent in April, and was supposed to increase it to 10 percent next year. But after the economy, already fragile after two decades of malaise, shrank for two quarters in a row, he put off the second increase until 2017.
The generation born as Japan’s economic bubble burst in the early 1990s will be supporting a vast cohort of retirees. Though their nation is rich, with ultra-modern public transport, low crime rates and excellent public health services, most are making do without the security of lifetime employment enjoyed by their parents and grandparents.
Meanwhile, Japan’s economy is being eclipsed by neighboring China, whose up-and-coming tech and industrial companies are increasingly potent rivals.
Low birth rates and increased life expectancy mean that Japan’s working age population is thinning out while the number of retirees and centenarians is swelling. The rapid aging of Japanese society is so evident in the mix of pedestrians on the street, in the media and in political discourse that it’s an issue on just about everyone’s mind.
Ryosuke Sunaga, a college senior decked out in his best job-hunting suit and brand new briefcase, said that by the time he has kids, he expects the sales tax will be at least 15 percent.
On Friday, Abe dissolved parliament for a Dec. 14 snap election he is calling to seek public approval of the tax hike delay and to affirm public support for his all-or-nothing policies to revive the world’s third-largest economy.
He has pledged to vanquish Japan’s long stagnation by injecting tens of trillions of yen (hundreds of billions of dollars) into the economy, pushing prices higher and the value of Japan’s currency lower. He also has promised a sweeping and drastic overhaul to help improve the country’s crumbling competitiveness.
As lawmakers rush to prepare for the election, Abe is renewing his campaign to persuade Japanese companies to raise wages and offer more opportunities for women workers. He also has promised to slash corporate taxes beginning next year to entice companies to invest more in Japan.
Ultimately, Japanese taxpayers will end up shouldering an even greater share of the country’s surging costs for health insurance, elder care and pensions, said Koichi Hamada, an economic adviser to Abe.
Source AP