Japan seems to be the poster child for what happens following an economic and demographic collapse. Their collapse started 20 years before ours did in 2008. Multiple QE’s later, here’s what it looks like.
Japan’s economic stagnation, often referred to as the “Lost Decades,” began in the early 1990s following the burst of an asset price bubble. From 1991 to 2003, Japan’s economy grew at an average annual rate of just 1.14%, significantly lower than other industrialized nations. Despite numerous quantitative easing (QE) measures, Japan’s nominal GDP fell from $5.33 trillion in 1995 to $4.21 trillion in 2023. Real wages also dropped by around 11% during this period.
The demographic situation in Japan is equally alarming. The country’s population has been declining since 2008, with the fertility rate falling to 1.26 in 2023. This decline has led to a rapidly aging population, with 30% of people aged 65 or older. The government has implemented various policies to incentivize births, but the results have been minimal.
South Korea faces a similar demographic crisis. Its fertility rate dropped to 0.72 in 2024, marking the fourth consecutive year of decline. The proportion of people aged 65 or older in South Korea is over 18%, and the country is struggling to maintain its workforce and public services.
The Western world is not immune to these trends. Falling fertility rates and an aging population are becoming common issues in many developed countries. The global fertility rate has more than halved since the 1960s, from over 5 children per woman to 2.3 in 2024. In Europe and North America, fertility rates are now below or close to 2 children per woman.
The situation in Japan and South Korea serves as a real-life warning about the dangers of demographic collapse. It’s time to wake up and make more babies in the Western world.
Sources:
https://www.cnn.com/2025/01/18/asia/japan-elderly-largest-womens-prison-intl-hnk-dst/index.html
https://www.newsweek.com/japan-new-alarming-population-update-fall-births-crisis-incentives-1948378
https://www.newsweek.com/japan-alarm-population-crisis-last-chance-1874181
https://www.newsweek.com/japan-news-plans-tackle-population-crisis-2025-2006421
https://www.newsweek.com/south-korean-plan-rescue-population-1899927
https://www.newsweek.com/south-korea-news-plans-tackle-population-crisis-2025-2007358
https://www.newsweek.com/south-korea-news-population-faces-point-no-return-2005918
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