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The Japanese economy has long been locked in a period of anemic growth, blamed by analysts such as Richard Koo of Nomura on its lengthy deleveraging process.
But what if that problem is being overestimated, and Japan’s real problem lay with its ageing population instead?
According to HSBC, while deleveraging certainly matters, demographics may be the more important factor in Japan’s slowdown.
Just look at Japan’s GDP per capita (in red) compared to the U.S. (black). Yes, the slowdown from 1996-2000 was a Japanese only affair, but otherwise the two economies move very much in sync when population is considered.
For those worried about the U.S. turning Japanese, don’t fret. We may already be.