The Survival Economist
Premiered Mar 9, 2022
Famed American investor Jim Rogers is warning in a new book that the worst economic downturn in his lifetime is around the corner and that Japan’s future is in jeopardy unless it takes serious steps to deal with staggering debt and a declining birth rate.
“Japan’s national debt is going to swell due to the Olympics, and this can only lead to a bad outcome for ordinary citizens,” Global investor Jim Rogers wrote in a new book entitled Warning To Japan.
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When Japan rose from the ashes of war to host the Olympics in 1964, it impressed the world with its urban infrastructure and avant-garde technology like its high-speed train and marked its emergence on the world stage as a global superpower. But Japan today is very different, said famed global investor Jim Rogers.
While Rogers is predicting that the 2020 Summer Olympics, also commonly known as Tokyo 2020 would bring a short-term boost to the Japanese economy, he said it would presage a longer-term downturn given that there is no solution in sight to a slew of socioeconomic issues like a shrinking and fast-aging population, the lack of gender equality, the reluctance to embrace immigration, low productivity, and a little appetite for disruption.
“Japan’s national debt is going to swell due to the Olympics, and this can only lead to a bad outcome for ordinary citizens,” Jim wrote in his new book, Warning To Japan.
The book, which is published in Japanese, comprises interviews with Oxford-educated entrepreneur Hakuei Kosato. It has cracked bestsellers’ lists and was reprinted six times within one month of its release in July.
Japan’s ballooning public debt now stands at 240 percent of its GDP, gross domestic product, and all previous attempts to bring the nation back to fiscal health have been postponed. The target of fiscal 2020 was pushed back to 2025, and yet even the most optimistic estimates now suggest this is implausible.
“There was such a long period of astonishing prosperity when everything worked,” Mr. Rogers said in an interview. “But Japan got so rich, so successful, that… it resulted in huge protectionism.” Prime Minister Shinzo Abe has tried to change things, but Mr. Rogers said many policy measures serve only to kick the can down the road rather than go far enough and try to obtain some concrete results.
“If there was somebody in Japan who will say, we got to bear this pain; we have to sort this out. And if we don’t, the 10-year-olds in Japan today will have no future,” he said.
“But the problem is that the politicians in power today don’t want to do that. They know if they cause the pain, it is not going to be good for them.” Japan, pressured by global headwinds, downgraded its economic outlook to “worsening” this month.
Among other things, it is facing sluggish exports in part due to a trade war between the United States and China, and an ongoing boycott of Japanese goods in South Korea. And while Mr. Rogers acknowledges Japan has opened up to foreigners under a new “specified skills” visa scheme for blue-collar workers launched in April, he said the influx needs to be more drastic to make an impact.
Japan is already facing a glut of jobs. The unemployment rate was 2.2 percent last month when there were 159 job openings for every 100 job hunters. But the visa program, under which up to 345,150 foreigners are to be welcomed by March 2024, has been off to a tepid start. This has raised interrogations about whether they want to work in Japan, and whether the locals are welcoming enough to these overseas workers.
Only about 600 people, mostly from South-east Asia, have been granted the visa, despite the fact the government wants to woo 47,550 foreigners in the program’s first year.
“They’re opening up a little bit, but not nearly enough,” he said. “It’s simple arithmetic. The population is going down, and they’re not having babies. It is straightforward but overwhelming and frightening for their future.”
Fewer than 900,000 Japanese babies are expected to be born this year, marking a new low. The population, now at 126.4 million, is expected to shrink to 88 million in 45 years.
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