A Bank of Japan policymaker on Wednesday encouraged businesses to take advantage of the central bank's ultra-easy monetary policy to find new areas for growth as the country's shrinking population heralds a fall in domestic demand.
In a speech to business leaders in Sapporo, Yukitoshi Funo, a BOJ Policy Board member, called for "the development of goods and services that will create new demand, and increased access to demand in other regions."
"With Japan's shrinking population, demand is likely to decline. The adjustment of supply, in other words, the adjustment of personnel and equipment, will be important," he said.
The nation's population peaked at 128.08 million in 2008 and has been on a downward trend since, according to data from the Internal Affairs and Communications Ministry. It is projected to fall below 100 million by 2055.
"The current situation of an extremely easy monetary climate and tight labor market presents a good opportunity for restructuring and building a growth strategy," Funo said.
"The private sector, which plays a key role in the real economy, should exert more leadership in improving productivity and creating demand. It is expected that financial institutions will respond to such efforts by taking a consulting role."
In April 2013, the BOJ started its highly accommodative monetary policy designed to shore up the economy. Current measures include large-scale asset purchases and negative interest rates.
Household spending in the country is slowly increasing, but not enough to spur inflation toward the BOJ's 2 percent target. The central bank says that it expects to reach that sometime around fiscal 2019, even though many analysts doubt that outlook.