Japan’s prolonged economic stagnation after its asset-price collapse became known as the Lost Decade.
The term originally referred mainly to the 1990s, after Japan’s stock and property bubbles burst. The Nikkei 225 had reached an all-time closing high of 38,915.87 on December 29, 1989. Property prices also fell sharply, leaving banks and companies burdened with bad loans and excessive debt.
Economic growth weakened, prices often stagnated or declined, and financial institutions spent years repairing their balance sheets. The Bank of Japan cut interest rates, including eventually bringing its policy rate close to zero, but weak demand and unresolved banking problems limited the recovery.
Many writers later extended the phrase to cover the 2000s and sometimes subsequent years, calling them Japan’s “Lost Decades.” The expression does not mean that every year had negative growth; it describes a long period of weak expansion, financial repair, and disappointing asset returns following the bubble’s collapse.