Japan's Lost Decade - An Economic Disaster [Documentary]
13 May 2024 (6 months ago)
Japan's Economic Boom in the 1980s
Plaza Accord and Economic Bubble
- Japan agreed to appreciate the Yen in the Plaza Accord of 1985, leading to a loosening of credit limits and interest rate cuts.
- Cheap money fueled a real estate bubble and stock market rally, with asset values soaring.
- The bubble burst in 1990, triggering a devastating economic crisis and prolonged stagnation known as the "Lost Decades."
Causes of the Economic Bubble
- Excessive lending by banks, encouraged by the Bank of Japan's window guidance policy.
- Overly optimistic government and public failed to recognize risks of aggressive lending and asset price inflation.
Consequences of the Bubble Burst
- Collapse in land and asset prices, triggering a severe economic downturn.
- Widespread bankruptcies, unemployment, and social distress, including a rise in suicides.
- Significant decline in the stock market, with major Japanese companies facing financial difficulties.
- Prolonged economic stagnation, slow GDP growth, and challenges adapting to global economic changes.
- Younger generation faced limited opportunities, leading to an increase in social withdrawal (hikikomori) cases.
Japan's Ongoing Economic Challenges
- Significant challenges following the 2011 earthquake and nuclear disaster, the 2008 financial crisis, and the recent pandemic, leading to increased debt and economic stagnation.
- Rapidly aging population, with a large portion over 65 and low birth rates, resulting in a shrinking young population to support the elderly.
- Birth rate dropped to a record low in 2023, influenced by economic pressures, high living costs, longer work hours, and shifting societal values.
- Government policies aimed at encouraging childbirth have largely failed, and Japan's economy has fallen to fourth place after entering a technical recession.
Lessons from Japan's Economic Experience
- Japan's economic bubble burst serves as a cautionary tale about the delicate balance of economic prosperity and the potential consequences of unchecked growth.
- Japan's economic challenges offer valuable lessons for other countries in managing economic growth and addressing societal issues.