Today, we’re talking about the Japanese Yen (JPY) and the demographic cliff Japan is currently base-jumping off of—without a parachute. In fact this conversation started as a discord message in the SL chat randomly. Since I have been studying this topic quite a bit I was able to supply quite a few plots quickly that surprised many people including a few Japanese individuals. If you’ve been following the news in 2025 and early 2026, you know the Yen has been acting like it’s allergic to value. But here’s the kicker: it’s not just about interest rates or trade deficits. It’s about the fact that there are simply fewer humans in Japan every single morning.
When a country loses 900,000 people in a single year, it loses consumers. Fewer consumers means companies stop investing locally and move their cash elsewhere. When the cash leaves, the Yen follows it out the door. It is that simple, and therefore, the correlation is that high!
While Tokyo still feels like a neon-soaked sardines-in-a-can situation, the rest of the country is quietly vanishing. We aren't just talking about a "slight dip." In rural prefectures like Akita, the population is dropping by nearly 2% every single year.
The magnitude of the decline in the countryside is staggering compared to the national average. We have roughly 9 million abandoned houses (Akiya) across the country. In villages like Nanmoku, only 2 hrs by car from Tokyo Shinjuku station, over 67% of the residents are over 65. When the labor force disappears, the economy doesn't just "slow down"—it evaporates.
As the rural areas hollow out, the tax base craters. To keep the lights on, the government has to print, borrow, and pray. This structural weakness puts a permanent "demographic discount" on the Yen. In the last 10 years, the correlation between the population growth rate and the JPY value has sat at a staggering 0.87.
The data tells a stark story: while Japan’s national population decline has accelerated into the -0.65% range, the situation in rural Japan is far more dramatic. In prefectures like Akita, the population is shrinking at more than three times the national rate, hitting -2.0% annually by 2024.
The northern Tōhoku region, where I travelled quite a bit recently, is essentially the "front line" of this crisis. Here are the prefectures seeing the sharpest drops in their native populations:
| Prefecture | Annual Decline Rate (%) | Key Characteristic |
|---|---|---|
| Akita | -1.91% | Highest elderly ratio (over 40% are 65+) |
| Aomori | -1.72% | Massive youth out-migration to Tokyo |
| Kōchi | -1.71% | Sharpest decline in the Shikoku region |
| Iwate | -1.69% | Significant rural hollowing out |
I’d call Akita the "spoiler alert" for the rest of Japan. It is currently experiencing what the rest of the country is projected to feel in 10–15 years:
It has the lowest birth rate in Japan and the highest death rate. More people are leaving (mostly 18-year-olds heading to university in Tokyo) and fewer are being born to replace those who pass away. The decline is so steep that historic industries—like its world-famous sake breweries—are struggling to find even a single apprentice to take over operations. If you visit some of the rural train stations, there is free sake for everyone! I don't know for how long though...
With a population projected to drop to just 60% of its current size by 2050, Akita is the first place where the government is having to discuss "compact cities"—essentially deciding which ghost towns to stop providing water and electricity to.
In Japan, there is a name for these abandoned houses: Akiya (空き家). As of 2024, there are roughly 9 million of them. That is nearly 14% of all homes in the country sitting empty, slowly being reclaimed by the mountain forests. There are numerous videos on YouTube where people are 'buying' free houses from the government. Here is one in the Seto In-land Sea area...
In a normal economy, a house is an asset. In rural Japan, an Akiya is a liability.
The Valuation Trap: In places like Akita or Aomori, you can buy a house for the price of a used Toyota—or sometimes literally 1 Yen. But nobody wants them because the cost of demolition ($10,000 to $30,000) is higher than the value of the land.
The Tax Black Hole: When a homeowner dies and the children have already fled to Tokyo, they often refuse the inheritance to avoid the property taxes. This leaves the municipality with a "ghost" property that generates zero tax revenue but still requires maintenance.
There is a poetic, yet tragic, correlation between the Akiya rate and the JPY value. As the number of empty houses climbs toward a projected 30% by 2033, the structural "dead weight" on the Japanese economy grows.
Investors look at a country where 1 out of every 3 buildings might soon be a ruin and they ask: "Where is the growth?" When the answer is "nowhere," the capital leaves, and the Yen drops.
So, bottomline, if you want to travel to Japan, which is spectacular, go now. Prices are cheap, and likely will remain cheap for a while.
