In Japan, crisis looms as economy slips
Nation faces fiscal, industrial woes
TOKYO - It’s been a humbling few days for Japan.
Standard & Poor’s threatened to downgrade the Japanese government’s credit rating because Prime Minister Yukio Hatoyama is moving too slowly to reduce the debt. And China overtook Japan as the largest maker of cars, according to an announcement from the Japanese Automobile Manufacturers Association.
The triple whammy of manufacturing and fiscal problems is a harbinger of what Japan faces in the coming years as its listless economy slips into an era of reckoning and national loss of face.
Within a year, Japan will probably lose to China its longtime status as the world’s second-largest economy. It is also expected to descend into the uncharted waters of public indebtedness as government debt swells to double the size of the country’s gross domestic product.
Although the alarming headlines grabbed the public’s attention, Japan’s most fundamental economic ills have not. Like distant melting glaciers, they have not alarmed voters, mobilized lawmakers, or triggered a national emergency response.
“I do think the current situation is quite doomed, but Japan does not yet have a sense of crisis,’’ said Hiroko Ogiwara, an economic commentator and author of popular money management books.
The building blocks of Japan’s future are collapsing, in the view of many economists. Japan has fewer children and more senior citizens as a percentage of its population than any country in recorded history, but the government does little to encourage childbirth or enable immigration. Even as the working-age population shrinks, only a third of Japanese women stay on in the workforce after having a child, compared with about two-thirds of women in the United States.
“The current direction is clearly unsustainable, and something has to be done,’’ said Takatoshi Ito, a professor of economics at the University of Tokyo.
