Japan's pandemic-hit economy shrank in 2020 for the first time in more than a decade, but the

contraction was less than expected and it ended the year on a strong note thanks to a pick-up
in exports and huge government support.

Still, analysts warned the near-term outlook could be bumpy as fresh virus restrictions
dampen domestic consumption, and with borders still closed to tourists less than six months
before the postponed Olympics.

The world's third-largest economy shrank  ..

However, the figure was better than forecast in a Bloomberg survey of analysts thanks
to a strong October-December performance, which saw the economy expand 12.7
percent from the previous quarter on an annualised basis.

Government stimulus measures of about $3 trillion since the Covid-19 pandemic began
provided crucial support.

The news helped send Tokyo's Nikkei 225 index rallying more than one percent to
break 30,000 for the first time in more than three decades.
 ..
What Was Japan's "Lost Decade" Real Estate Crisis?
Free markets economies are subject to cycles. Economic cycles consist of fluctuating periods
of economic expansion and contraction as measured by a nation's gross domestic
product (GDP).

The length of economic cycles (periods of expansion vs. contraction) can vary greatly. The
traditional measure of an economic recession is two or more consecutive quarters of falling
gross domestic product. There are also economic depressions, which are extended periods of
economic contraction such as the Great Depression of the 1930s.

From 1991 through 2001, Japan experienced a period of economic stagnation and price

deflation known as "Japan's Lost Decade." While the Japanese economy outgrew this period,
it did so at a much slower pace than other industrialized nations. During this period, the
Japanese economy suffered from both a credit crunch and a liquidity trap.

Understanding Japan's "Lost Decade" Real Estate Crisis

Japan's Lost Decade
Japan's economy was the envy of the world in the 1980s—it grew at an average annual rate
(as measured by GDP) of 3.89% in the 1980s, compared to 3.07% in the United States.1  But
Japan's economy ran into troubles in the 1990s.

From 1991 to 2003, the Japanese economy, as measured by GDP, grew only 1.14% annually,
well below that of other industrialized nations.1

KEY TAKEAWAYS

 Japan's "Lost Decade" was a period that lasted from about 1991 to 2001 that saw a
great slowdown in Japan's previously bustling economy.
 The main causes of this economic slowdown were raising interest rates that set a
liquidity trap at the same time that a credit crunch was unfolding.
 The major lessons economies can take from Japan's "Lost Decade" include using
available public funds to restructure banks' balance sheets and that sometimes the fear
of inflation can cause stagnation.