Japan: 1.2% Growth (IMF 2025), $56,850 GDP/capita PPP 2025,
$35,970 GDP/capita 2025, HDI 0.925 2026 WPR, Gini 32.3 2026 WPR,
1.3% inflation FEB 2026.
KEY TOPICS: Prolonged deflation (Lost Decade, nearly ten years of slow or negative economic growth
during the 1990s), aggressive monetary policy (low or even negative interest rates, QE between 2001-2006),
ageing population + shrinking workforce. Yen depreciation. Innovation in robotics, infrastructure (bullet
trains). Universal healthcare: mandatory coverage for anyone who permanently resides in Japan for three
months or more. This includes both Japanese citizens and non-Japanese citizens.
DEFINE Deflation: A sustained decrease in the general price level of goods and services across an economy
over a certain period, occurring when the CPI inflation rate falls below 0%. Japan experienced a deflationary
period from the 1990s, known as the Lost Decade, driven by the 1991 asset bubble bursting. This collapse of
stock and real estate prices left banks with debt/non-performing loans (loans in default or close to default).
DEFINE Quantitative Easing: Central bank purchasing government bonds and financial assets (summarise as
private assets) to increase the supply of money in the economy, often accompanied by lowering interest rates
to stimulate activity. Between March 2001 and March 2006, the Bank of Japan purchased a total of 37 trillion
yen in Japanese government bonds and short-dated financing bills, expanding its balance sheet to 152.3 trillion
yen. Despite this, growth remained low between 0% and 2.2% (World Bank Open Data).
DEFINE Currency depreciation: A decrease in the value of a currency in a floating exchange rate system
relative to another, making exports cheaper and imports dearer. The Yen fell approximately from 103 to 157
per USD between 2021-2024. This made Japanese exports (cars, electronics, machinery) more competitive
internationally, with Toyota and Sony reporting record overseas profits. However, Japan imported approx.
87.4% of its total energy supply in 2024, meaning the weaker Yen would have increased the costs of fuel, gas
and imported food.
DEFINE Ageing population: A demographic shift where the median age of a population rises and the
proportion of elderly citizens increases relative to the working age population. Japan has the world’s oldest
population, with 29% of citizens aged 65+ (2023) and expected to reach 35% by 2040 (World Economic
Forum). This reduces the labour force, raises healthcare and pension costs and puts a sustained downwards
pressure on potential GDP growth. [NOTE: Paired with fertility crisis, this becomes a population problem].
DEFINE Supply-side policies: Government policies aimed at increasing the productive capacity of the
economy. Prime Minister Shinzo Abe built a policy based on 3 arrows: (1) aggressive QE, (2) Fiscal
stimulus/gov spending, (3) structural reform e.g. boosting female workforce participation by raising the
proportion of female managers to 30% by 2020 from 2013’s 7.5% rate, or cutting corporation tax from
approx. 37% to below 30%.
$35,970 GDP/capita 2025, HDI 0.925 2026 WPR, Gini 32.3 2026 WPR,
1.3% inflation FEB 2026.
KEY TOPICS: Prolonged deflation (Lost Decade, nearly ten years of slow or negative economic growth
during the 1990s), aggressive monetary policy (low or even negative interest rates, QE between 2001-2006),
ageing population + shrinking workforce. Yen depreciation. Innovation in robotics, infrastructure (bullet
trains). Universal healthcare: mandatory coverage for anyone who permanently resides in Japan for three
months or more. This includes both Japanese citizens and non-Japanese citizens.
DEFINE Deflation: A sustained decrease in the general price level of goods and services across an economy
over a certain period, occurring when the CPI inflation rate falls below 0%. Japan experienced a deflationary
period from the 1990s, known as the Lost Decade, driven by the 1991 asset bubble bursting. This collapse of
stock and real estate prices left banks with debt/non-performing loans (loans in default or close to default).
DEFINE Quantitative Easing: Central bank purchasing government bonds and financial assets (summarise as
private assets) to increase the supply of money in the economy, often accompanied by lowering interest rates
to stimulate activity. Between March 2001 and March 2006, the Bank of Japan purchased a total of 37 trillion
yen in Japanese government bonds and short-dated financing bills, expanding its balance sheet to 152.3 trillion
yen. Despite this, growth remained low between 0% and 2.2% (World Bank Open Data).
DEFINE Currency depreciation: A decrease in the value of a currency in a floating exchange rate system
relative to another, making exports cheaper and imports dearer. The Yen fell approximately from 103 to 157
per USD between 2021-2024. This made Japanese exports (cars, electronics, machinery) more competitive
internationally, with Toyota and Sony reporting record overseas profits. However, Japan imported approx.
87.4% of its total energy supply in 2024, meaning the weaker Yen would have increased the costs of fuel, gas
and imported food.
DEFINE Ageing population: A demographic shift where the median age of a population rises and the
proportion of elderly citizens increases relative to the working age population. Japan has the world’s oldest
population, with 29% of citizens aged 65+ (2023) and expected to reach 35% by 2040 (World Economic
Forum). This reduces the labour force, raises healthcare and pension costs and puts a sustained downwards
pressure on potential GDP growth. [NOTE: Paired with fertility crisis, this becomes a population problem].
DEFINE Supply-side policies: Government policies aimed at increasing the productive capacity of the
economy. Prime Minister Shinzo Abe built a policy based on 3 arrows: (1) aggressive QE, (2) Fiscal
stimulus/gov spending, (3) structural reform e.g. boosting female workforce participation by raising the
proportion of female managers to 30% by 2020 from 2013’s 7.5% rate, or cutting corporation tax from
approx. 37% to below 30%.
