What is Lost Decade?
703 reads · Last updated: December 5, 2024
The Lost Decade is commonly used to describe the decade of the 1990s in Japan, a period of economic stagnation which became one of the longest-running economic crises in recorded history. Later decades are also included in some definitions, with the period from 1991-2011 (or even 1991-2021) sometimes also referred to as Japan's Lost Decades.
Definition
The Lost Decade typically refers to Japan's 1990s, a period of economic stagnation and one of the longest recorded economic crises. Later decades are sometimes included in some definitions, with the period from 1991 to 2011 (or even 1991 to 2021) also referred to as Japan's Lost Decade.
Origin
The Lost Decade originated from the bursting of Japan's economic bubble. In the late 1980s, Japan experienced a massive bubble in real estate and stock markets. As the bubble burst in the early 1990s, Japan's economy fell into a prolonged stagnation, leading to the Lost Decade.
Categories and Features
The Lost Decade is characterized by slow economic growth, deflation, and high unemployment. The slow response of the government and banking system exacerbated the issues. Despite various economic stimulus measures, the effects were limited, resulting in prolonged economic malaise.
Case Studies
During the Lost Decade, many Japanese companies faced financial difficulties. For example, Hitachi experienced declining profits and restructuring in the 1990s. Another example is Mitsubishi Bank, which merged with Bank of Tokyo during this period to cope with economic challenges.
Common Issues
Investors often misunderstand the causes of the Lost Decade as solely the bubble burst, overlooking the slow policy response and structural economic issues. Another common issue is underestimating the long-term impact of deflation on the economy.
