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Why Japan Experiences Deflation and How can it be solved

Updated on May 29, 2013

Aging population

Increasing proportion of the population is pensioners, and pensioners have less money to spend (this means their spending power is lower).

Shrinking Population

The population of Japan is shrinking, making the demand even lower.

Strict Immigration Policies

Inadequate number of foreigners receive a residence permit, so skilled foreign workers (most notably from China and southeastern Asia like Vietnam) aren’t allowed to work in Japan.

High Competition of Retailers

Retail stores (most notably large floor area discount and grocieries malls) constantly lowers their prices to increase their market share in the country, i.e.: consumers would buy products from them, not somewhere else.

Too Many Retailers in Japan

This goes hand in hand with the above, fierce competition reason. The Japanese retail market is too fractured and divided up.

International Trade

Japan should be more liberal in its trading policies. The country should allow more imports entering Japan.

Foreign Language

Japanese people should learn more foreign languages, primrily english, mandarin (Chinese), and Korean.

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