Japan's population shrinks by nearly 1M since 2010

Japan's latest census confirmed the hard reality long agosignalled by shuttered shops and abandoned villages across thecountry: the population is shrinking.

Japan's population stood at 127.1 million last fall, down 0.7 percent from 128.1 million in 2010, according to results of the 2015census, released Friday. The 947,000 decline in the population inthe last five years was the first since the once-every-five-yearscount started in 1920.

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Unable to count on a growing market and labour force to powereconomic expansion, the government has drawn up urgent measures tocounter the falling birth rate.

Prime Minister Shinzo Abe has made preventing a decline below 100million a top priority. But population experts say it would bevirtually impossible to prevent that even if the birth rate rose toAbe's target of 1.8 children per woman from the current birthrate of1.4.

Without a substantial increase in the birthrate or loosening ofstaunch Japanese resistance to immigration, the population isforecast to fall to about 108 million by 2050 and to 87 million by2060.

Cities continue to grow

Tokyo's rush hour trains are just as crowded as ever: Japan'sbiggest cities have continued to grow as younger workers leave smalltowns in search of work. The census showed Tokyo's population grewto 13.5 million, up 2.7 per cent since the 2010 census.

But a visit to any regional city will find entire blocks of smallshops shuttered, the owners usually either retired or deceased. Inrural areas, even just outside Tokyo, villages are mostly empty,fields overgrown and bus and train services intermittent thanks toscant demand.

The rate of population growth peaked in 1950 and has fallencontinuously since 1975. By 2011 it had hit zero, the census figuresshow.

Population problems spanAsia

Though Japan is leading this demographic shift, the rest of Asiais following. In South Korea, China and elsewhere in Asia, improvedlife spans and falling birthrates are raising worries over how toprovide for the rapidly expanding ranks of seniors with shrinkinglabour forces.

A World Bank report issued late last year forecast that healthand pension spending will rise sharply at a time when elders cancount on less support from their families.

"The rapid pace and sheer scale of aging in East Asia raisespolicy challenges, economic and fiscal pressures and social risks,"the report said.

It recommended that governments facilitate more participation inthe labour force by women and seniors, provide better childcare andelder-care, and revamp their pension and health systems to cope.

For Japan, the demographic crunch is one of the biggestchallenges to a postwar economic model based on rising incomes andconsumption.

Nearly a third of all Japanese were over 65 years old in 2015. By2050, almost 40 per cent will be older than 65, according toprojections by the National Institute of Population and SocialSecurities Research.

Richard Katz of The Oriental Economist forecasts that by 2045there will be 13 per cent fewer workers per person in Japan. Thatmeans each worker would need to produce 13 per cent more in terms ofeconomic value to offset the decline and maintain current livingstandards.

Japan's economy has stagnated for most of the past two decadespartly because companies are reluctant to invest in a market theyare convinced will continue to shrink.

Abe took office in late 2012 vowing to spur growth throughmassive stimulus and sweeping reforms to improve Japan'scompetitiveness. So far few of the reforms have been realized,though corporate profits soared thanks to the resulting weakening inthe Japanese yen against other currencies.

Meanwhile, Abe's growth agenda has stalled, as companies haveopted to invest their cash piles overseas, in faster growingmarkets, instead of upgrading factories and raising wages -- movesthat might stimulate demand inside Japan.