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Wed, 04/03/2024 - 01:49
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Over 1 Pct Growth to Stabilize Japan's Social Security: Govt Estimate

Tokyo, April 2 (Jiji Press)--The ratio of medical and nursing care benefits to nominal gross domestic product in Japan is expected to become stable or shrink if the country's real GDP continues to grow over 1 pct on average, the Cabinet Office said Tuesday.

The proportion of medical and nursing care benefits to nominal GDP is projected to start declining in fiscal 2040 or later if the average real GDP growth stands at 1.7 pct between fiscal 2025 and fiscal 2060. The ratio is likely to stay around 8.5-9 pct if the average growth is 1.2 pct.

The estimate was calculated under the premises that labor participation by those aged 65-69 increases dramatically and that the total fertility rate, or the number of children born to a woman in her lifetime, rises to around either 1.80 or 1.64 from 1.33 in 2020.

The estimate is valid if the government keeps making efforts for social security reform, such as by streamlining the distribution of benefits through digitalization and reviewing the balance of benefits and burdens for working generations and elderly people, the Cabinet Office said.

The Cabinet Office said that if the average growth is 0.2 pct, Japan may lose the long-term stability of social security and public finances.

Prime Minister Fumio Kishida told a meeting of his Council on Economic and Fiscal Policy, where the estimate was put forward, that it is necessary to steadily promote fiscal reform while addressing increases in medical and nursing care benefits.

Private-sector participants said that in order to achieve economic growth of over 1 pct, it is necessary to stimulate investment for innovation. They also called for further fiscal reform efforts to prepare for higher interest rates.