Lost Decades

The Lost Decades is a lengthy period of economic stagnation in Japan precipitated by the asset price bubble's collapse beginning in 1990. The singular term Lost Decade (失われた10年, Ushinawareta Jūnen) originally referred to the 1990s,^[1] but the 2000s (Lost 20 Years, 失われた20年)^[2] and the 2010s (Lost 30 Years, 失われた30年)^[3][4][5] have been included by commentators as the phenomenon continued.^[4]

From 1991 to 2003, the Japanese economy, as measured by GDP, grew only 1.14% annually, while the average real growth rate between 2000 and 2010 was about 1%, both well below other industrialized nations.^[6][4] Debt levels continued to rise in response to the financial crisis in the Great Recession in 2008, the Tōhoku earthquake and tsunami and the Fukushima nuclear disaster in 2011, and the COVID-19 pandemic and subsequent recession in January 2020 and October 2021.

Broadly impacting the entire Japanese economy, over the period of 1995 to 2007, the country's GDP fell from $5.33 trillion to $4.36 trillion in nominal terms,^[7] real wages fell around 5%,^[8] while the country experienced a stagnant price level.^[9] In 2024, the country entered a technical recession which caused it to lose its position as the world’s third largest economy to Germany.^[10][11][12] The real effective exchange rate also hit a record low due to the recession^[13] and is expected to fall even further as the Japanese yen become an increasingly weak currency.^[14][15][16]

While there is some debate on the extent and measurement of Japan's setbacks,^[17][18] the economic effect of the Lost Decades is well established, and Japanese policymakers continue to grapple with its consequences.