Japan has recorded a decline in the number of births for the tenth year in a row in 2025, underscoring the nation's escalating demographic pressures and posing a significant challenge to the new government's ability to effectively address the population crisis. Preliminary data released on Thursday by Japan's Ministry of Health, Labour and Welfare shows that the number of newborns in Japan fell by 2.1% year-on-year in 2025 to approximately 706,000. Over the same period, the number of deaths saw a slight decrease of 0.8%, to about 1.6 million.

In response to the shrinking population, Prime Minister Sanae Takaichi is attempting to advance a series of economic incentives, including tax breaks and child-rearing subsidies. However, these proposals, designed to reduce the cost of raising a family, have not yet been formally implemented. The persistently low birth rate has heightened market concerns about Japan's long-term economic growth potential. Furthermore, the perceived diversion of the government's focus away from population policy has led to questions about whether the urgency of reversing the birth rate decline has been downgraded on the national agenda.

The shift in policy priorities has drawn external scrutiny. Prior to the Liberal Democratic Party leadership election last October, Sanae Takaichi proposed several incentives, such as tax deductions for hiring nannies and housekeeping services, and corporate tax cuts for companies establishing in-house daycare centers. As Japan's first female prime minister, she also pledged to introduce national qualifications for childcare workers and improve their pay and working conditions. During the opening of a parliamentary session last week, Takaichi stated the government would reduce costs associated with pregnancy and childbirth, but these policies have not yet materialized.

Market and public concern centers on the possibility that the current administration's policy focus is shifting. Some observers suggest that, compared to previous governments, the present administration's attention has turned toward national security and policies concerning foreigners. Former Prime Minister Fumio Kishida introduced a 3.6 trillion yen (approximately $23.1 billion) childcare package in 2023, describing it as an "unprecedented measure to counter the declining birthrate," a stance later maintained by Shigeru Ishiba. Under Takaichi's leadership, child policy has been integrated into a broader population agenda that includes policies for foreigners. The minister responsible for addressing population decline, Hitoshi Kikawada, currently oversees eleven other portfolios, including territorial disputes and food security, leading to widespread speculation that the birth rate issue may have been sidelined.

Historical data highlights the long-term nature of the challenge. The preliminary data released on Thursday has a broad scope, including babies born to foreign residents in Japan and Japanese nationals living overseas. In contrast, narrower final data provides a clearer picture of the domestic population dilemma. The final data for 2024, which counts only Japanese nationals residing in Japan, was approximately 686,000, a record low since records began in 1899. The final data for 2025 is typically released in September of this year and is expected to further reveal the true depth of the population decline.

Japan is not alone in attempting to reverse demographic decline, as many major global economies are intensifying efforts with various economic incentives. In South Korea, which also faces population pressures, data released on Wednesday showed the country's birth rate rose for a second consecutive year in 2025, supported by incentives aimed at reducing childcare costs and as the number of marriages recovered from a prolonged slump. Additionally, US President Donald Trump has proposed a $5,000 baby bonus. Meanwhile, China plans to provide an annual allowance of 3,600 yuan (approximately $500) for children under three years old, seeking to ease the financial burden on families through direct subsidies.