why japan’s gdp/economy is stagnate ?
In: Economics
Japan had an economic bubble burst in the late 80’s to early 90’s, and they’ve never truly recovered. The Bank of Japan bailed out a lot of institutions at this time, leaving Japan with a lot of debt, and the economy never really sprung back into life the way it should have. A lot of it has to do with poor decisions made by the Bank of Japan, before and after the bubble burst.
But, the biggest issue that Japan will have to overcome (if it can) is that its population is rapidly aging. Japan has the highest, or one of the highest, life expectancies in the world while also having a below replacement fertility rate. Their population is declining, rapidly, and some estimates say they might fall below 100 million people in the next couple of decades (they had 128 million in 2010). A below replacement fertility rate can be offset with immigration, but Japan is notoriously difficult to immigrate to.
Japan has a debt to GDP ratio of over 250%. They have massive amounts of debt, with a population that is shrinking. It’s difficult, if not impossible, for an economy to expand in those circumstances.
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