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Eco Castle, Tokyo, Japan
Japan, with the third largest economy in the world, has a new prime minister, Mr. Yoshihide Suga. He faces an array of tough challenges, some immediate, others more fundamental. First on the list, as in most other economies, is clawing back from the ravages the lockdowns and quarantines that the pandemic seemed to require. There are also more fundamental challenges that predate the pandemic and will remain after it is only a memory. Large parts of Japan’s economy need modernization. Mostly, Mr. Suga and his government need to deal with the country’s aging demographics. More than any single influence, this aging trend, so severe that Japan’s population is actually shrinking, is responsible for the country’s poor economic performance for the last quarter century. All policy, whether from Suga government or his successors, will ultimately be judged by how well it deals with this demographic challenge.
Suga has pledged to continue the policies of his popular predecessor, Shinzo Abe. What has come to be called Abenomics, had, according to that prime minister’s own description, “three arrows:” an expansive fiscal policy and a comparably expansive monetary policy as well as regulatory …
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