Expansion continues in Japan.

According to a June 11, 2007 Reuters story filed from Tokyo, "Japan is currently enjoying its longest period of economic expansion in the postwar era, albeit at a slower pace than previous booms, thanks to solid exports and capital spending."

The Reuters report said, too, that the Japanese economy outperformed both the economy of the United States (US) and that of the euro zone for the past two consecutive quarters.

The role of the country's consumers, however, is subject to some debate. Reuters points out that personal consumption accounts for approximately 55 percent of Japan's GDP. For the January 2007-March 2007 quarter, personal consumption increased 0.8 percent. This is the most recent estimate, which was revised downward from a previous estimate of 0.9 percent.

Citing "analysts" as its source, Reuters said that personal consumption was not sustainable in the months ahead largely because of an increase in Japan's "residence tax," which takes effect in June 2007.

One of the analysts said, "Consumption could lose steam especially in July-September [2007] after the scheduled changes in taxes."

On the other hand, a report titled, "Japan's Economic Outlook 2007-2008," published by the Mitsubishi Research Institute (Tokyo) on May 21, 2007 said, "At present, personal consumption is maintaining a tone of improvement."

According to International Monetary Fund (IMF) statistics, Purchasing Power Parity (PPP) per capita income has increased at rates sometimes markedly higher than GDP every year for the past decade. In 2004, for example, PPP per capita increased 5.1 percent and GDP increased 2.7 percent. In 2007, the IMF estimates Japan's GDP will increase 2.3 percent while PPP per capita will increase 4.2 percent.

Japan is a nation of savers. Consumers can be characterized as conservative when it comes to spending. Yet when value is apparent, and consumer perceptions of the economic situation are favorable, spending is a reliable contributor to GDP.

May 2007 consumer sentiment was down very slightly indicating that it was too early to predict what the effect of the residence tax would be.

JAPAN'S AGING POPULATION POSES A SERIOUS CHALLENGE

The population growth rate for Japan is below the regional average, due in part to a birth rate of 9 per thousand inhabitants, which is lower than the average of 12 per thousand for East Asia. Job creation has kept up with growth of the labor force in recent years, and it is likely that the situation will stay about the same in 2007. Unemployment is running about 4.0 percent, and this continues to buoy consumer confidence.

Japan's population reached 128-million people mid-2006, which amounted to just over 8.0 percent of East Asia's 1.5-billion inhabitants. According to data released by the Population Reference Bureau (PRB), Japan's population will fall to 121-million by 2025. Also, according to that source, Japan is going to have a population of 101-million people in 2050.

The PRB revealed that a substantial 79 percent of Japan's population lived in urban areas during 2006, and that the country's population density is 876 people per square mile. Japan is about 6.0 percent bigger than Germany in land area, and Japan has approximately one third more residents. The CIA's World Factbook, indicates that 14 percent of Japan's population was birth to 14 years old in 2007, while 65 percent was 15 to 64 years old, and 21 percent of the populace was 65 years of age and over.

The CIA estimates that the country's population growth rate was minus 0.09 percent in 2007. According to the United Nations Population Division, in the year 2050, 13 percent of Japan's population will be birth to 14 years old, while 45 percent will be aged 15 to 59, and 42 percent of the populace will be 60 years of age and over.