Japan’s Prime Minister Shinzo Abe has made headlines. Most credit him with bold policies to deal with Japan’s long-standing problems. This is misplaced. In truth, his policies are neither bold nor effective. Abe has concentrated almost exclusively on standard fiscal and monetary stimuli while utterly failing to cope with his country’s more fundamental issues – its intensifying demographic strains and its outdated economic arrangements. Until he addresses these matters substantively, Japan’s economic and investment prospects will remain constrained at best.
However much the prime minister and his government choose it ignore it, demographics will increasingly put Japan under intense pressure. Years of improving health have created the longest lived people on earth, while years of remarkably low birth rates have slowed the flow of young people into the workforce.
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