Japan has the highest debt-to-GDP ratio in the world at 177.08%. In the late 1980s, Japan’s real estate and stock market prices were hugely inflated, and the resulting economic bubble burst in 1992, leading to a period of financial stagnation known as the ‘Lost Decade’. Japan has since grown into the world’s third-largest economy, but with the global financial crisis and a number of domestic catastrophes – including the 2011 earthquake and tsunami, which was the globe’s most expensive natural disaster, causing almost $325 billion-worth (£245bn) of damage – it has had little opportunity to quash its debts. Along with other Asian economies, Japan has led the so-called ‘Zoom boom’ as its economy quickly bounced back from the recession caused by the COVID-19 pandemic, with 5% growth in the third quarter of 2020. But this recent triumph is a drop in the ocean when it comes to the country’s astounding debt, and the knife-edge on which it leaves Japan’s economy.
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