Frightening estimates for Japan

Japan's real GDP contracted 1.1% in the last quarter on an annualized basis, according to Cabinet Office.

Fine.

It isn't supposed to be fine, for God's sake. Contraction is a problem. But Japan's markets, be it stock, currency, or bond, shrugged it off as if nothing important happens. Recently, they have reacted only to overseas events like US's economic data or China's monetary policy, etc. Domestic news is little to nothing for them.

There is a reason this time, of course: the current quarter is going to be fine, so investors don't have to worry about the past data. Maybe or Maybe not. Rather, headline news focused on China as the world's second largest economy instead of Japan.


By the way, there is a very close correlation between population and GDP. As you see, Japan is losing its population.

Then, what if Japan keeps losing its population as estimated? What about GDP?

The National Institute of Population and Social Security Research published the future population projections for Japan in 2006. Projections based on the assumption of "high fertility, medium mortality" have fit well to the actual data so far. According to that, Japan's population is estimated to keep declining and fall under 100 million in 2053, the first time since 1966.

If so, what about GDP? Well, using the estimation in the graph above, we have a frightening figure for Japan.

According to the estimation, Japan's GDP is forecast to be negative in 2046!!

Of course, this is a stupid calculation. But right now it's very hard to paint a bright picture, if any, for Japan's future.