Japan - Deficits, Demography and Deflation
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Transcript of Japan - Deficits, Demography and Deflation
JAPAN: DEFICITS,
DEMOGRAPHY, AND
DEFLATIONPresentation by: Robert Wensley
International Economy and Business July 18, 2011
HARVARD UNIVERSITY
AGING POPULATION
Japanese Population Forecast
Portion Aged 20-64 to 65 and over:
2000 – 3.6:12050 – 1.4:1
Smaller piece of the pie...
EFFECTS?
Increased debtLabor shortagesEconomic slowdownIncreasing costs of social programsShrinking savingsTrade surplus to deficitDrive industry overseas
Unsustainable Debt Levels
Debt = 234% of GDP
Non-Competitive Interest Rates
Less than 1% in 2009
Declining Savings Rate
Less than 4% in 2008
Solution?
DEMOGRAPHY!
Must either increase labor SUPPLY or EFFICIENCY
–Education
–Technology
–ManagementPractices
EFFICIENCY
–Increase Immigration
–Raise the Retirement Age
–Raise theFertility Rate from 1.3 to 2.1+
SUPPLY
Last year 60,000 foreign workers moved to Japan, the UN claims 600,000/year will be needed to maintain the workforce.
Spending Cuts
Source: World population prospects, 2008 Revision, United Nations.
WHO IS NEXT?
THANK YOU!