Elliott & Associates Research Global Markets: Japan's Death Spiral and its Economic Effects
In 2014, the estimated birth-rate in Japan reached a record low of a mere 1 million while the number of registered deaths reached 1.3 million. Such downward trajectory in the country even worsens the already bad situation with a shrinking and aging population.
In 2014, the estimated birth-rate in Japan reached a record low of a mere 1 million while the number of registered deaths reached 1.3 million. Such downward trajectory in the country even worsens the already bad situation with a shrinking and aging population.
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ELLIOTT & ASSOCIATES RESEARCH GLOBAL MARKETS<br />
<strong>Japan's</strong> <strong>Death</strong> <strong>Spiral</strong> <strong>and</strong> <strong>its</strong> <strong>Economic</strong> <strong>Effects</strong><br />
<strong>Japan's</strong> number of births has hit an all-time low for 4 years in a row, spelling a worrying<br />
issue on <strong>its</strong> already delicate economy.<br />
In 2014, the estimated birth-rate in Japan reached a record low of a mere 1 million while the<br />
number of registered deaths reached 1.3 million. Such downward trajectory in the country even<br />
worsens the already bad situation with a shrinking <strong>and</strong> aging population.<br />
As noted by <strong>Elliott</strong> & <strong>Associates</strong> <strong>Research</strong> <strong>Global</strong> <strong>Markets</strong>, births in Japan have seen a huge <strong>and</strong><br />
relentless decline for decades now. Starting in 1973, there was not a year where the fertility rate in<br />
Japan hit enough numbers to support a stabilized population. Though there were some recent<br />
improvements made, they were still not enough to increase the numbers. The number of deaths<br />
that has outnumbered the number of births by the biggest margin yet poses a problem for the<br />
government to ensure the small workforce can continue to support growing number of seniors.<br />
Experts would say Japan is in a "death spiral" because <strong>its</strong> demography has been on a bad<br />
situation for a long time now that it is virtually impossible to change <strong>its</strong> trajectory significantly.
Data shows that the so-called "death spiral" started in the 1970s <strong>and</strong> has since proceeded in a<br />
gradual but steady decline. Indeed, last year's population decline was a record low but that's<br />
already something to be expected every year for the next decades.<br />
According to an official from <strong>Elliott</strong> & <strong>Associates</strong> <strong>Research</strong> <strong>Global</strong> <strong>Markets</strong> with knowledge of the<br />
data, the women of who are of reproductive age are declining which inevitably leads to a decline in<br />
the number of kids. To be fair, Japanese women today are having a bit more children on average<br />
than they did years ago. However, there are fewer women in the population now who could bear a<br />
child so it's still not enough to make up for the difference.<br />
<strong>Japan's</strong> government bond market has been surprisingly strong even in such demographic issues<br />
though this cannot be counted on to continue indefinitely. There will come a time that people will<br />
realize Japan won't have enough productive citizens anymore <strong>and</strong> so won't be able to return debts<br />
(except perhaps by printing money).<br />
The Japanese government has already issued a warning that by the year 2060, almost 40% of<br />
their population would consist of seniors. As it is, they are already having difficulties supporting the<br />
pensioners that make up one fourth of <strong>its</strong> total population now.