TOKYO: Japan is struggling with its economy as the country hosts the yearly meeting of the G-7 industrialized nations. Japan has the world’s third-largest economy, behind the U.S. and China. Many countries copied Japan when it had a strong and growing economy.
Japan has been dealing with deflation for many years. Deflation is “a decrease in the amount of available money or credit in an economy that causes prices to go down.” Deflation can often cause a recession. The population in Japan is growing older and the country is not diverse. Most people in the country are ethnic Japanese. Last year, people in Japan criticized Miss Japan, Ariana Miyamoto, for not being “Japanese enough.” She has a Japanese mother and a black American father.
Many Japanese also do not support mass immigration, which other countries have used to make up for, or balance, the effects of a declining and aging population. Takuji Okubo is the managing director of Japan Macro Advisors. He says Japanese Prime Minister Shinzo Abe does not understand problems the labor market or with pensions. He says the prime minister “has been just unable to tackle any reforms.”
Many of Japan’s public pension plans do not have enough money to make payments. This has caused many families to believe the plans will fail, so they save a lot of money. The average Japanese family has about $164,000 in savings. That is much higher than that of families in other developed countries. Young Japanese working in their first jobs do not earn a lot of money, so they do not have much to spend. And people who are retired and have savings are worried about their monthly payments, so they are not spending money either.
