Japan plans to include steps to raise the birth rate, such easier access to childcare and tax incentives, in a package of reforms due this month to tackle the biggest bottleneck to economic growth. Japan's population began declining four years ago after several years of warnings that the birth rate was too low, prompting some economists to applaud Prime Minister Shinzo Abe's decision to put the issue on the agenda.

"I want to confront the demographic problem head on and place particular emphasis on policies that will contribute to raising the birth rate," Abe said yesterday after a cabinet meeting. However, others warn the government has fallen so far behind on the population issue that it will be difficult to raise economic growth without opening up to large-scale immigration. Most countries would turn to immigration, but this has met with resistance from politicians and the public, who prize the country's mostly homogenous society.

"There is a lack of childcare facilities and improving this is important," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. "However, this will not boost growth in the next five years. The more direct way is through immigration." Abe wants to raise the birth rate to 1.8 per woman from 1.42 currently by loosening regulations on childcare providers and making it easier for women to return to work after their child is born. Advanced economies usually require a birth rate around 2.1 children per woman simply to keep the population stable.