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News Release

Population Aging in Major Conurbations
- Estimates of its Impact on the Consumer Markets -

September 05, 2005

The impact of population aging on the real economy is likely to be more visible in major conurbations than in provincial areas. This is because population aging is already advanced in provincial areas but has yet to begin in earnest in major conurbations and the elderly population is likely to grow rapidly until 2030.

Moreover, as the flow of people into major city areas has accelerated since 2000, it is possible that the growth of the elderly population in major conurbations will accelerate still further in the future.

Taking Tokyo, as a typical example of a major conurbation, the impact that ongoing population aging is likely to have on consumer spending through the changes it will bring about in household composition is likely to be as follows:

*Against the backdrop of a rise in the number of households and a rise in unit purchase price (a shift towards greater added value), the consumer markets are likely to continue to grow at least until around 2015.

*Studies of change in the structure of consumption reveal that, if anything, it is in spending on basic necessities such as food and housing, rather than discretionary spending on travel, etc. that major growth is likely to occur.

These observations suggest that even as Japan starts to become a society with a declining population, from a business management perspective at least, excessive concern over a possible downsizing of the economy is unwarranted. Promising business opportunities abound and an emphasis on three key phrases - (i) major conurbations, (ii) spending on basic necessities, (iii) greater added value - should give companies plenty of scope to grow their businesses.

For more information on the content of this report, please contact: Hideki Matsumura the Japan Research Institute, Limited.

Tel: 03-3288-4524

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