Senior Citizens to Drive Japan's Consumer Economy: Chart of Day

By Lee J. Miller

Aug. 18 (Bloomberg) -- Japan, the only developed nation to register more deaths than births in a year, will have senior citizens as its largest consumer group by the year 2020, Mitsubishi UFJ Financial Group Inc. said in a report.

``The elderly will play a leading role in Japan's domestic consumption,'' the report said. People in their 70s and older will account for about 20 percent of consumption, up from 13 percent in 2005, the Mitsubishi UFJ report said.

The CHART OF THE DAY shows the proportion of people at least 65 years old in Japan, the U.S., U.K. and China since 1991. The U.K. had an older population than Japan until about a decade ago.

About 20.6 percent of Japan's 127 million people are at least 65, according to the U.S. Census Bureau. A report last week by the Bureau said 20.2 percent of the U.S. population will be in that age group by 2030. It projected America's population to grow more than 40 percent over that period to 439 million people.

Japan's population started to decline in 2007, Mitsubishi UFJ said, citing Japan government data, the result of a low birth rate and people living longer.

``We believe the decrease in the total population will inevitably impact personal consumption for every expenditure item,'' the report said. Spending on medical care, reading and recreation are among the services that will increase as Japan's population ages, the Aug. 8 report said.

Spending by ``junior baby boomers,'' people mostly born after 1970, probably won't be as much as by the previous generation because of ``defensive'' spending habits learned in recent years, when Japan's economy had stagnating wages and limited growth relative to other countries, the report said.

To contact the reporter on this story: Lee J. Miller in Bangkok at lmiller@bloomberg.net