…Understanding how Japan got here is simple: It had one of the world’s fastest-growing economies for much of the 20th century, and then it hit a slump that never abated.
The period after World War II was a full-on economic miracle. With massive investments in industrialization and legendary manufacturing acumen, Japan became the second-largest economy in the world, behind only the US — in some years during the 1960s, GDP grew by more than 10%.
Then came another kind of pop — the one that ends a bubble. But this was no typical bubble — it produced outlandish numbers like these:
- Land values in Tokyo increased 10% in 1986, 57% in 1987, and 22% in 1988, more than doubling in three years. At one point, real estate economists estimated that the few acres of land under the city’s Imperial Palace were worth more than all of the real estate in Canada.
- The real estate bubble coincided with a stock market boom, as firms were being valued with their massively appreciated real estate holdings in mind (uh-oh). The Nikkei Index rose every single year in the 1980s, culminating in speculator-fueled gains of 40% in 1988 and 29% in 1989.
- Capital gains in Japan from land and stocks in 1987 comprised more than 40% of the gross national product.
To rein in speculation, the Bank of Japan raised inter-bank lending rates in 1989, which burst the bubble. Japan’s stock market crashed — equities fell 60% between 1989 and 1992 — and real estate values tumbled along with them. After averaging around 4% in the 1980s, Japan’s annual GDP growth rate from 1992 to 2007 was barely above 1.1%, according to OECD data.
Lots of information about the Japanese economy. Not so sure about the headline prediction so I added (maybe). ABN
American Buddhist Net 
