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Japan Looks to Leave its Lost Decades Behind

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Japan Looks to Leave its Lost Decades Behind

Daily Upside,

5 min read
3 take-aways
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What's inside?

A new economic day may be dawning in the Land of the Rising Sun.

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Editorial Rating

8

Qualities

  • Analytical
  • Background
  • Engaging

Recommendation

At the end of 1989, the Nikkei stock index hit unprecedented highs while Japanese real estate experienced a legendary bubble. The Bank of Japan raised rates, the Nikkei crashed, and the Japanese economy began three decades of stagnation. Journalist Sean Craig, writing in The Daily Upside, suggests that 2024 may have marked the beginning of the end of these “Lost Decades,” as the Bank of Japan finally abandoned its rescue efforts and welcomed signs of inflation. Although Craig warns that his insights are pending further developments, he certainly finds signs of hope. Anyone in international economic or planning roles should take note.

Summary

The Japanese refer to the period following the 1989 market crash as the “Lost Decades.”

Japan enjoyed stupendous economic performance following World War II, with annual GDP increases exceeding 10% in some years. Real estate values soared from 1986 to 1988. Spurred by this real estate bubble, Japan’s Nikkei stock index surged at the end of the 1980s. Then, between 1989 and 1992, both stock and land prices plunged. For the next 15 years, Japan’s GDP grew by barely 1% per year.

Consequently, the Japanese came to see spending as risky, and they tightened their belts so much that prices dropped throughout all sectors of Japan’s economy. The Bank of Japan (BOJ) employed the Keynesian tool kit, slashing interest...

About the Author

Sean Craig is a reporter at The Daily Upside.

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