Japan’s Cabinet Office has cut its forecast for real gross domestic product growth in the fiscal year beginning April 2026 to 0.7%, down from the 1.2% expansion it projected in January. The downgrade reflects weaker prospects for private consumption and exports, according to officials briefed on the new outlook. The bleaker economic view coincides with fresh demographic data showing the country’s population problems deepening. Figures from the Internal Affairs Ministry released this week indicate the number of Japanese nationals fell by a record 908,574 in 2024 to 120.65 million, the steepest drop since the survey began in 1968. Including foreign residents, the total population stood at 124.3 million as of 1 January, 0.44% lower than a year earlier. In a separate move aimed at easing cost-of-living pressures and bolstering recruitment, the government is preparing the largest pay rise for public workers in 34 years. The planned increase, details of which are still being finalised, would be the most significant adjustment to civil-service salaries since 1991.