The fiscal 2005 "Annual Report on the Japanese Economy and Public Finances" pays attention to the impact on the economy of two inevitable demographic changes: the expected shrinkage of the population (the first such shrinkage since World War II) and the retirement in large numbers of baby boomers born immediately after World War II.
The recently released report takes up the effects of these demographic changes for the first time. It's about time -- in view of the fact that Japan's population is due to start shrinking in 2007. The report also declares an end to the postbubble economy, stating that the Japanese economy has virtually rid itself of three drags on economic growth -- excessive labor, production capacity and debt (bad loans held by banks).
The baby boomers -- Japanese born between 1947 and 1949 -- total 6.8 million, accounting for 5.3 percent of the population. Meanwhile, people aged 15 to 64, who are regarded as the core of the nation's labor force, has been declining since 1995.