Why does the economy need to continue to grow, especially in countries such as Japan where population is declining?

Question

Why does the economy need to continue to grow, especially in countries such as Japan where population is declining?

In: 56

Answer 1

Only one reason a country’s economy needs to grow: because they made a promise that growth would continue.

This promise is made every time a country goes into debt. Just like someone who takes out a loan from a bank, they are promising to pay it back through all of the money they are going to make as a result of the loan. This is exactly how and why countries are able to finance national debt: they promise that their economy will grow in the future.

A country that does not show economic growth will not be able to finance their debt and then they are completely screwed.