1% in Q4 2013--has been the status quo for over two decades, but now add to this mix (1) a gargantuan, punishingly huge budget deficit [as opposed to a merely unsustainable one] and (2) a snowballing trade deficit [those energy imports more than cancel out export increases] and their situation is clearly deteriorating:
Funny thing, though: All that cash hasn't solved Japan's problems. The virtuous cycle that aggressive BOJ policies were supposed to unleash still hasn't begun. A 20 percent drop in the yen isn't raising living standards, as hoped. Nor has it convinced companies to fatten paychecks. Whatever inflation Japan is feeling is the bad kind: Energy imports are boosting consumer prices and denting business and consumer confidence.Helicopter-dropping money is easy enough. However, long-advocated structural changes are harder to come by:
Instead, [Bank of Japan Governor] Kuroda's main achievement in his first year has been to settle a debate once and for all. Japan's big problem clearly isn't the amount of yen in the system but how it's used. Unless people borrow and banks lend, monetary policy lacks the multiplier effect that can revive economies. Besides, deflationary forces still abound -- from Japan's aging population to China's rising influence. Just as money can't buy you love, a wall of yen can't buy Japan prosperity. "Kurodanomics" just isn't enough.
He must implement the structural reforms at the heart of his "Abenomics" program -- rewriting corporate taxes, lowering trade barriers, stimulating innovation, empowering women and opening the labor market. Otherwise, Japan's best chance in years to restore vibrant growth will likely fail like every other over try the last two decades.Here, "opening the labor market" means bringing in folks for the simple reason that Japan is well and truly depopulating. Actually, Japan has been trying to attract skilled migrants, but the trouble is that this homogeneous and closed society has trouble attracting any sort of migrants for precisely those reasons:
The pressing need to generate homegrown power aside, there is no greater issue for Japan than that which they fail to address since it's a lot harder to than, say, increasing the national debt from 200% to 400% of GDP. The debt burden also makes you wonder why anyone would come to Japan to work off being a debt slave, but hey, these questions are the sort the Japanese really need to confront instead of playing foolish economic games that leave them worse off in the long run alike Abenomics.National Institute of Population and Social Security research projects that the current population of 127 million will be 84 million in five decades’ time. The working-age population (15–64) will apparently fall by nearly half from today’s level of 80 million to 42 million. In short, 50 years from now, not only will the population have fallen dramatically but the labour-force population will have fallen even faster. The number of elderly people 65 and over will amount to 40 per cent of the population, causing substantial strain on Japan’s workers to sustain the non-working population.For Japan, accumulating highly skilled foreign professionals has been more difficult than expected. This is made challenging because Japan has few features that can be considered appealing to foreigners as a migration destination, including a highly homogenous country with a language barrier that makes it difficult for migrants to have a rich social life.