they are demographic and historical problems for the most part.

A demographic problem is an economic problem. I wasn't going to respond to this thread because I don't have particularly in-depth knowledge of the Japanese economic situation, but demographics and economics are so intertwined you can't write something of as a "demographic" problem. Political and economic issues don't fit into neat little boxes where you can ignore other factors. Higher unemployment for blacks in the United States for instance has a large number of associated issues, from economic implications to social issues.

In the case of Japan, one of the most important is the aging population. Take a look at this population pyramid and notice the trend for Japanese population numbers - it's going down. What happens to the economy of a nation with a lower population? Well, it will probably contract unless there are major growths in workforce efficiency to compensate the loss in the workforce.

In 20 years from now it's predicted that Japan's population will be 20 million people lower than it currently is, and many of those still alive will be hitting the age where they will no longer be working. The economic impact of this will be tremendous. One might say that so long as they maintain a high standard of living then a contraction of the economy is fine (and personally, I would tend to agree). However, with diminished economic output comes diminished economic power and influence. Perhaps imports/exports will become less favorable. Perhaps Japan could fall behind in the tech or science sector as the number of skilled professionals falls off. There are any number of effects that could come with a declining population, though I won't pretend to be an expert on this issue.

It's impossible to discuss the economic situation of Japan without taking demographics into account.