The economy has been showing some signs of recovery lately, thanks to the success of Abenomics. At the year's outset, many business executives predicted 1.5 to 2.2 percent growth. However, fears persist that the national economy may not achieve such positive results in the face of a number of unsettled structural problems, such as the decline and aging of the population, a fragile financial structure and stagnant regulatory reform. In fact, as the calendar turned the page to 2016, the Bank of Japan had to introduce a new monetary measure. Considering this development, one cannot help but worry about weakness in the nation's growth potential.
Toward the end of last year, Prime Minister Shinzo Abe came out with his "new three arrows" of Abenomics. The plan, aimed at promoting "dynamic engagement of all citizens," envisages achieving nominal gross domestic product of ¥600 trillion in 2020, realizing a birthrate of 1.8 and making sure no people have to quit their job to care for their relatives. Some related budgetary measures have already been prepared.
But in view of the progress of the population decline and aging, as well as the stagnation of financial, social insurance, regulatory and education reform, a decline in economy's growth potential appears unavoidable. In the early 1990s, Japan represented 16 percent of the world's GDP, but its share had dropped to 7 percent by 2013. The OECD estimates that the share will come down to 3 percent in 2060.