Japan’s fertility rate inched up for the third year in a row in 2008, but its ageing population still shrank, with 51,300 more deaths than births, a report from the health ministry showed on Wednesday.

With a population of 127.6 million, Japan faces serious economic consequences as it expects over a quarter of its citizens to be aged over 65 by 2015.

The population is expected to shrink by a third within 50 years if current trends continue.

The fertility rate, or the average number of children a woman bears in her lifetime, rose to 1.37 in 2008, up 0.03 points from the year before but still far from the estimated 2.07 needed to maintain a population.

Japan’s fertility rate remains among the lowest in the developed world and compares to 2.12 in the United States and 1.84 in Britain.

The low birth rate threatens to squeeze the economy by shrinking the labour force, which could weigh in on its GDP and leave fewer workers to support a growing number of pensioners.

TOKYO (Reuters)