Toward Human Capital Investment to Support Domestic Demand

～The Key to Growth in a Shrinking Economy～

Saeko MAEDA

  Principal Economist

Katsuaki OCHIAI

  Specially Appointed Fellow

Akira TANAKA

  Senior Economist

Ryo HASUMI

  Specially Appointed Fellow

Chihiro SATO Trainee Economist(Secretariat of the House of Councillors)

   

Takahisa HONDA Trainee Economist(Nikkei Inc.)

   

Shogo YAMASHITA Trainee Economist(Aflac)

   

2019/04/25

JCER Medium-Term Economic Forecast Team

The Japanese economy has expanded, supported by overseas economies shifting to a position of strength; however, there are also signs of change in its movement. In the medium term, we cannot grow through dependence on overseas economies.
The protectionist policies in some countries have significantly cooled the global economy. The short-term effects have already appeared, and have taken on the appearance of an economic war of attrition. Moreover, in the medium–long term, the ageing demographics in Europe and Asia are expected to slow growth.
Turning our eyes to the Japanese domestic market, consumption and investment structures are changing with population aging and digitalization. Demand for human services, particularly medical care and nursing, is increasing. In these fields, the growing demand cannot be adequately addressed if productivity cannot be increased, and human resources secured. To that end, it is necessary to change labor-intensive industries through new technologies, centering on information communications technology (ICT) and robotics. Domestic capital investment, such as investment in labor-reduction trends, is also increasing; however, this growth is modest compared with the growth in company profits. Inadequate investment in human resources, such as new technology introduction and training, will disturb improvements in productivity. Thus, it will become impossible to break from a shrinking economy due to a lack of human resources.
While factoring in the difficult overseas economic environment, responses to structural changes in domestic demand are required for investment and to secure human resources from both domestic and overseas regions. This may well be the key to revitalizing the economy.