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TOKYO (Reuters) - Japan's population grew at its slowest rate since 1920 in the five years to 2010, data showed Friday, underscoring the challenges for policy-makers struggling with the rising costs of an aging society.
Japan's population grew by 288,000 during the five years to October 2010 to 128.05 million, census data showed. That translates into a growth rate of 0.02 percent, the lowest on record and well below the 1945-1950 postwar peak of 15.3 percent.
"The 0.2 growth rate was slightly higher than expected, although it does not change the fact that the number of Japanese is likely to decrease," an internal affairs ministry official said.
The decreasing growth rate is a headache for Japan, which has a shrinking pool of taxable citizens and ballooning social welfare costs to care for an increasing number of elderly.
Slowing population growth also means that Japan, already the most indebted industrial nation with public debt double its $5 trillion economy, will find it increasingly difficult to spread its debt burden.
Social experts attribute the low population growth to factors including the high cost of raising children, more women choosing to remain in the work force rather than opt for childbirth, and the country's reluctance to accept immigrants.
Japan's ruling Democratic Party has introduced allowances for households with children to try to boost the birthrate, but the sustainability of the program are unclear as the government struggles to enact a workable budget for the year form April 1 in a divided parliament and unpopular Prime Minister Naoto Kan fights for his job.
Standard & Poor's cut Japan's debt rating last month for the first time in nine years, saying the country lacks a coherent plan to tackle huge public debt.
Moody's this week reduced the outlook on Japan's sovereign debt to negative from stable and warned that it may also cut Japan's rating if government policies fall short of a comprehensive tax reform needed to keep public debt under control.
Editing by Michael Watson