Japan’s demographic burden: How the aging Japanese population is impacting its economy and consumption

Abstract

The objective of this project is to understand the precarious condition of Japanese demographics and understand the implications this has on the nation’s consumption patterns, income distribution and the economy in general. We began by analyzing the inflation situation by delving into the composition of the CPI basket of Japan and comparing the components with other developed economies. Differences, particularly in housing inflation, were observed and analyzed. In the following section we have attempted to understand the real income trends and the growing inequality in income distribution in the society between the youth and the elderly. The logical next step led us to the differences in consumption between the different age groups. Our findings revealed that the expenditure on health care by the elderly was eight times that by the younger population and this was accompanied by an increase the number of establishments and employees in an otherwise dismal economic scenario. The reminder of the report focuses on the health care and medical sector, wherein we have studied the recent trends, rising demand and how the supply of health care has sought to keep up with the rising demand. We have also studied the rising expenditure for healthcare and the sustainability of the current funding structure. Finally, we have explored what this means for health care as a business sector and the opportunities that Japan holds for pharmaceutical and medical devices companies.