Ageing population hampers Japanese govt's recovery efforts
The Bank of Thailand expects Japan's economic recovery to take a long time despite the new government's focus on economic stimulus, as the country has a large number of people reaching old age, which could slow down investment and domestic demand.
Songtum Pinto, director of the central bank’s Monetary Policy Office, said that although Japan’s new government would focus on easing monetary policy to promote economic growth, the country’s recovery might not happen soon, as its elderly population is growing while the proportion of working people is shrinking.
With its ageing society, Japan has faced deflation due to low domestic demand and flat investment. At the same time, the growing number of elderly people increases government costs, which boosts the level of public debt.
“Don’t expect the Japanese economy to make a fast recovery after its political change. Japan has been facing structural problems with the large number of elderly people. With this population structure, people do not want to go ahead with investment, and this leads to deflation. We have to wait and see how much the stimulus will help boost the economy,” Songtum said.
Roong Mallikamas, BOT director for macroeconomic policy, said that whoever is running the Japanese government could not do much because of limited monetary tools and public debt amounting to more than 200 per cent of gross domestic |product.
“Japan is expected to see a recession. We need to keep an eye on its policy direction,” Roong said.
