Paul Krugman, a Nobel Prize-winning economist and New York Times columnist, has just published an astute article on the reasons behind Japan’s long-term economic slump. In short, it’s largely down to demographics:
When you look at Japan’s declining share of world GDP, and even its relative decline in per capita GDP, the biggest single cause is the declining number of working-age Japanese.
The Japanese government is gradually increasing the retirement age from sixty to sixty five. Germany, whose demographics are similar to Japan’s (a low birth rate and a greying population), has gone one step further: it recently raised the retirement age from sixty five to sixty seven.