Editing Economy of Japan (section)

==History==
{{Main|Economic history of Japan}}
The economic history of Japan is one of the most studied. Major milestones in modern Japan's economic progress include:

* The foundation of the [[Tokugawa shogunate]] based in [[Edo (Tokyo)|Edo]] (in 1603), initiating a period of internal economic development.
* The [[Meiji Restoration]] (in 1868) leading to Japan becoming the first non-European modern world power.
* [[surrender of Japan|Japan's defeat in World War II]] (in 1945), after which the island nation rose to become the world's second-largest economy.
* The [[Lost Decades]] (the 1990s, 2000s and arguably 2010s), during which the country struggled to get out of deflation and extremely low or negative growth.

=== Edo period (1603–1868) ===
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[[File:Hiroshige, Sugura street.jpg|thumb|An 1856 [[ukiyo-e]] depicting Echigoya, the current [[Mitsukoshi]]|left]]
The beginning of the [[Edo period]] coincides with the last decades of the [[Nanban trade|Nanban trade period]], marked by intense interaction with European powers. Japan built its first Western-style warships, such as the [[San Juan Bautista (ship)|''San Juan Bautista'']], and commissioned around 350 [[Red seal ships|Red Seal Ships]] for intra-Asian commerce. Japanese adventurers, such as [[Yamada Nagamasa]], were active throughout Asia.<ref>{{Cite web |title=Yosha Bunko |url= http://yoshabunko.com/history/Yamada_Nagamasa_in_Siam.html |access-date=31 May 2024 |work=yoshabunko.com |archive-date=24 September 2023 |archive-url= https://web.archive.org/web/20230924003001/http://yoshabunko.com/history/Yamada_Nagamasa_in_Siam.html |url-status=live}}</ref>

To eradicate [[Christianization|Christian influence]], Japan entered a period of isolation called ''[[sakoku]]'' in the 1630s, which led to economic stability and mild progress. In the 1650s, [[Japanese export porcelain]] production increased significantly due to [[Transition from Ming to Qing|a civil war in China]], mainly in [[Kyushu]].<ref>{{Cite web |title=Hizen: The Cradle of Japanese Porcelain {{!}} Saga, Nagasaki {{!}} Japan Heritage |url= https://jnto.cb.bunka.go.jp/popular/e561822d-ce94-4557-9f1a-7d6b09ee543b |access-date=31 May 2024 |work=Japan Heritage Official Site {{!}} Stories and travel information {{!}} JNTO }}{{Dead link|date=June 2024 |bot=InternetArchiveBot |fix-attempted=yes}}</ref> This trade dwindled by the 1740s under renewed Chinese competition but resumed after Japan’s mid-19th century opening.

Economic development during the Edo period included [[Urbanization|urbanisation]], increased commodity shipping, and expanded domestic and foreign commerce. The construction trades, banking facilities, and merchant associations flourished.  [[Daimyo|''Daimyō'']]-led authorities (''han'') oversaw rising agricultural production and rural handicrafts. By the mid-18th century, Edo had a population of over 1 million, while Osaka and Kyoto each had more than 400,000 inhabitants, becoming centres for trade and [[handicraft]] production.<ref>{{Cite web |last=日本放送協会 |title=文字と画像で見る {{!}} 日本史 |url= https://www.nhk.or.jp/kokokoza/nihonshi/contents/resume/resume_0000000594.html |access-date=31 May 2024 |work=高校講座 |language=ja |archive-date=1 June 2024 |archive-url= https://web.archive.org/web/20240601005822/https://www.nhk.or.jp/kokokoza/nihonshi/contents/resume/resume_0000000594.html |url-status=live}}</ref> Rice, the economy’s base, was taxed at about 40% of the harvest and sold at the fudasashi market in Edo. [[Daimyo|''Daimyō'']] used [[forward contract]]s similar to modern futures trading to sell rice before harvest.<ref>{{Cite web |author=<!--Staff writer(s); no by-line.--> |title=Dojima rice exchange: The world's first futures exchange |work=JPX: Japan Exchange Group |publisher=[[Osaka Exchange]] |date=2020 |url= https://www.jpx.co.jp/dojima/en/index.html |access-date=15 March 2025 |url-status=live |archive-url= https://web.archive.org/web/20231129214838/https://www.jpx.co.jp/dojima/en/index.html |archive-date=29 November 2023}}</ref>

During the ''sakoku'' period, Japan studied Western sciences and techniques (''[[rangaku]]'') through Dutch traders in Dejima, including geography, medicine, natural sciences, astronomy, and mechanical sciences. Japan reopened its economy to the West after being pressured by the [[United States]] twice in 1853 and 1854.<ref>{{Cite web |title=The Coming of the 'Black Ships' (kurofune) to Japan {{!}} Edo no Taihen (great pivotal events of Edo) |url= https://www.library.metro.tokyo.lg.jp/portals/0/edo/tokyo_library/english/taihen/page3-1.html |access-date=31 May 2024 |work=library.metro.tokyo.lg.jp |archive-date=1 March 2024 |archive-url= https://web.archive.org/web/20240301042220/https://www.library.metro.tokyo.lg.jp/portals/0/edo/tokyo_library/english/taihen/page3-1.html |url-status=live}}</ref>

=== Pre-war period (1868–1945) ===
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Since the mid-19th century, after the [[Meiji Restoration]], the country was opened up to Western commerce and influence and went through a period of economic development that extended through to the [[World War I|First World War]].<ref>{{Cite web |title=The Meiji Restoration and Modernization {{!}} Asia for Educators {{!}} Columbia University |url= http://afe.easia.columbia.edu/special/japan_1750_meiji.htm |access-date=3 October 2022 |work=afe.easia.columbia.edu |archive-date=2 July 2012 |archive-url= https://web.archive.org/web/20120702114058/http://afe.easia.columbia.edu/special/japan_1750_meiji.htm |url-status=live}}</ref> Economic developments of the [[Empire of Japan|prewar period]] began with the "[[Fukoku kyōhei|Rich State and Strong Army Policy]]" by the [[Meiji government]]. During the [[Meiji period]] (1868–1912), leaders inaugurated a new Western-based education system for all young people, sent thousands of students to Europe and the United States, and hired more than 3,000 Westerners to teach modern science, mathematics, technology, and foreign languages in Japan (''[[Oyatoi gaikokujin]]''). The government also built an extensive railway network, improved roads, and inaugurated a land reform program to prepare the country for further development.<ref>{{Cite web |title=Japan - The Economy - Patterns of Development |url= https://countrystudies.us/japan/98.htm |access-date=3 October 2023 |work=countrystudies.us |archive-date=9 October 2023 |archive-url= https://web.archive.org/web/20231009172123/https://countrystudies.us/japan/98.htm |url-status=live}}</ref>

To promote [[industrialisation]], the government decided that, while it should help private business to allocate resources and to plan, the private sector was best equipped to stimulate economic growth. The greatest role of government was to help provide good economic conditions for business. In short, government was to be the guide and business the producer. In the early Meiji period, the government built factories and shipyards that were sold to entrepreneurs at a fraction of their value. Many of these businesses grew rapidly into the larger [[conglomerate (company)|conglomerates]] such as [[Mitsubishi]]. Government emerged as chief promoter of [[private enterprise]], enacting a series of pro-business policies.<ref>{{Cite web |date=8 December 2021 |title=5.6G: The Government's Role in Industrialization |url= https://thothios.com/c-1750-to-1900/unit-5-revolutions/5-6g-the-governments-role-in-industrialization/ |access-date=5 November 2022 |work=Thothios |archive-date=5 November 2022 |archive-url= https://web.archive.org/web/20221105195535/https://thothios.com/c-1750-to-1900/unit-5-revolutions/5-6g-the-governments-role-in-industrialization/ |url-status=live}}</ref>

=== Post-war period (1945–1989) ===
{{See also|Japanese economic miracle|}}
[[File:2005Japanese exports.PNG|thumb|right|300px|Japanese exports partners in 2005]]

Japan underwent significant economic transformation and rapid recovery and growth, emerging from the devastation of the [[World War II|Second World War]] to become a global economic powerhouse. The immediate post-war period saw Japan slowly recovering as a democratic nation under the [[Allied Occupation of Japan|Allied Occupation]]. The [[Korean War]] (1950–1953), which happened in its now divided  former colony, boosted the economy, as Japan served as a major supply hub for U.S. forces. By the 1950s and 1960s, Japan’s economy had entered a period of high growth, often referred to as the '[[Japanese economic miracle|Japanese Economic Miracle]]'. Key factors in this growth included government-industry cooperation, a strong work ethic, advanced technology, and a focus on export-oriented [[Manufacturing in Japan|manufacturing]]. Japan’s economy diversified from textiles to steel, shipbuilding, and eventually electronics and automobiles, with companies such as [[Toyota]], [[Sony]], [[Hitachi]] and [[Honda]] becoming household names worldwide.<ref>{{Cite encyclopedia |date=31 May 2024 |title=Japan {{!}} History, Flag, Map, Population, & Facts |url= https://www.britannica.com/place/Japan |access-date=31 May 2024 |encyclopedia=[[Britannica.com]] |archive-date=8 October 2023 |archive-url= https://web.archive.org/web/20231008141219/https://www.britannica.com/place/Japan |url-status=live}}</ref>

In 1968, Japan became the world’s third-largest economy then the second largest in the 1988, surpassing the economy of the [[Soviet Union]]. A position it held until it was surpassed by [[China]] in 2010. The government played a crucial role through policies that promoted industrial expansion and technological advancement. Japan’s emphasis on quality control and continuous improvement ({{lang|ja-Latn|[[kaizen]]}}) further boosted its international competitiveness.<ref>{{Cite web |title=Kaizen: Understanding the Japanese Business Philosophy |url= https://www.investopedia.com/terms/k/kaizen.asp |access-date=31 May 2024 |work=Investopedia |archive-date=29 April 2024 |archive-url= https://web.archive.org/web/20240429115839/https://www.investopedia.com/terms/k/kaizen.asp |url-status=live}}</ref> By the 1980s, Japan was leading in a wide range of industries, including automotive and consumer electronics, and was known for its formidable trade surplus and wealth.<ref>{{Cite web |title=Slowdown |url= https://www.grips.ac.jp/teacher/oono/hp/lecture_J/lec12.htm |access-date=31 May 2024 |work=www.grips.ac.jp |archive-date=29 May 2024 |archive-url= https://web.archive.org/web/20240529111446/http://www.grips.ac.jp/teacher/oono/hp/lecture_J/lec12.htm |url-status=live}}</ref> However, the late 1980s also saw the infamous [[Plaza Accord]] and the formation of an asset price bubble, with inflated real estate and stock market prices, setting the stage for the economic stagnation of the '[[Lost Decades]]' that followed.

=== Heisei period (1989–2019) ===
{{See also|Lost Decades}}[[File:G7 Countries GDP Per Capita (1990-2029).png|thumb|300x300px|Japan's nominal GDP per capita stagnated around $40,000 for the entire period.]]
[[File:Japan bonds.webp|thumb|300px|{{center|Japan bonds}} [[Inverted yield curve]] in 1990 <br /> [[Zero interest-rate policy]] started in 1999<ref>{{cite web | url=https://www.weforum.org/stories/2024/03/japan-ends-negative-interest-rates-economy-monetary-policy/#:~:text=%E2%80%9CBOJ%2520decided%2520to%2520implement%2520a,%252C%2520namely%25200.25%2520to%25200.5%2525 | title=Japan ends era of negative interest rates. Here's why }}</ref>
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[[File:Japan money supply and inflation.webp|thumb|300px|Japan money supply and inflation (year over year)
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Growth slowed markedly in the late 1990s also termed the [[Lost Decades|Lost Decade]] after the collapse of [[Japanese asset price bubble]]. As a consequence Japan ran massive budget deficits (added trillions in Yen to Japanese financial system) to finance large [[public works]] programs.

By 1998, Japan's public works projects still could not stimulate demand enough to end the economy's stagnation. In desperation, the Japanese government undertook "structural reform" policies intended to wring speculative excesses from the stock and real estate markets. Unfortunately, these policies led Japan into deflation on numerous occasions between 1999 and 2004. The Bank of Japan used [[quantitative easing]] to expand the country's money supply in order to raise expectations of inflation and spur economic growth. Initially, the policy failed to induce any growth, but it eventually began to affect inflationary expectations. By late 2005, the economy finally began what seems to be a sustained recovery. GDP growth for that year was 2.8%, with an annualised fourth quarter expansion of 5.5%, surpassing the growth rates of the US and [[Economy of the European Union|European Union]] during the same period.<ref>Masake, Hisane. [https://web.archive.org/web/20060311003951/http://atimes.com/atimes/Japan/HC02Dh01.html A farewell to zero]. ''Asia Times Online'' (2 March 2006). Retrieved on 28 December 2006.</ref> Unlike previous recovery trends, domestic consumption has been the dominant factor of growth.

[[File:Japanese Bond Market.webp|thumb|300px|Japanese bond market <br /> [[Negative interest on excess reserves|Negative interest rates]] started in 2014.
{{legend-line|#FF42A1 solid 3px|40 year bond}}
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Despite having interest rates down near zero for a long period of time, the quantitative easing strategy did not succeed in stopping price deflation.<ref>{{cite news |last=Spiegel |first=Mark |title=Did Quantitative Easing by the Bank of Japan 'Work'? |date=20 October 2006 |url= http://www.frbsf.org/publications/economics/letter/2006/el2006-28.html |access-date=23 December 2008 |archive-date=19 October 2012 |archive-url= https://web.archive.org/web/20121019135129/http://www.frbsf.org/publications/economics/letter/2006/el2006-28.html |url-status=dead}}</ref> This led some economists, such as Paul Krugman, and some Japanese politicians, to advocate the generation of higher inflation expectations.<ref>{{cite web |url= http://web.mit.edu/krugman/www/jpage.html |title=Saving Japan |first=Paul |last=Krugman |work=web.mit.edu |access-date=23 December 2008 |archive-date=20 October 2008 |archive-url= https://web.archive.org/web/20081020111606/http://web.mit.edu/krugman/www/jpage.html |url-status=live}}</ref> In July 2006, the zero-rate policy was ended. In 2008, the Japanese Central Bank still had the lowest interest rates in the developed world, but deflation had still not been eliminated<ref>{{cite news |title=Economic survey of Japan 2008: Bringing an end to deflation under the new monetary policy framework |date=7 April 2008 |url= http://www.oecd.org/document/12/0,3343,en_2649_34115_40363340_1_1_1_1,00.html |access-date=23 December 2008 |archive-date=25 May 2009 |archive-url= https://web.archive.org/web/20090525080450/http://www.oecd.org/document/12/0,3343,en_2649_34115_40363340_1_1_1_1,00.html |url-status=live}}</ref> and the Nikkei 225 has fallen over approximately 50% (between June 2007 and December 2008). However, on 5 April 2013, the [[Bank of Japan]] announced that it would be purchasing 60–70 trillion yen in bonds and securities in an attempt to eliminate deflation by doubling the money supply in Japan over the course of two years. Markets around the world have responded positively to the government's current proactive policies, with the [[Nikkei 225]] adding more than 42% since November 2012.<ref>{{cite news |url= https://money.cnn.com/2013/04/04/news/economy/bank-of-japan-decision/index.html |publisher=CNN |first=Charles |last=Riley |title=Bank of Japan takes fight to deflation |date=4 April 2013 |access-date=3 August 2020 |archive-date=29 October 2020 |archive-url= https://web.archive.org/web/20201029175923/https://money.cnn.com/2013/04/04/news/economy/bank-of-japan-decision/index.html |url-status=live}}</ref> ''[[The Economist]]'' has suggested that improvements to bankruptcy law, land transfer law, and tax laws will aid Japan's economy. In recent years, Japan has been the top export market for almost 15 trading nations worldwide.

In December 2018, a [[free trade agreement]] between Japan and the [[European Union]] was cleared to commence in February 2019. It creates the world's largest [[free trade zone]] valued at 1/3rd of global gross domestic product. This reduces tariffs on Japanese cars by 10%, duties by 30% on cheese and 10% on wines and opens service markets.<ref>{{cite web |title=EU-Japan free trade deal cleared for early 2019 start |url= https://www.reuters.com/article/us-eu-japan-trade-idUSKBN1OB1EN |work=Reuters |date=12 December 2018 |access-date=23 October 2020 |archive-url= https://web.archive.org/web/20200616210243/https://www.reuters.com/article/us-eu-japan-trade-idUSKBN1OB1EN |archive-date=16 June 2020}}</ref>

=== Reiwa period (2020–present) ===

=== 2020–21 recession ===
In early January 2020, Japanese economy began to suffer from the [[COVID-19 pandemic in Japan|COVID-19 pandemic]]. In early April, Japanese Prime Minister [[Shinzo Abe]] announced a [[state of emergency]].<ref>{{cite news |url= https://www.npr.org/sections/coronavirus-live-updates/2020/04/16/835925031/japans-declares-nationwide-state-of-emergency-as-coronavirus-spreads |title=Japan Declares Nationwide State of Emergency as Coronavirus Spreads |first=Brakkton |last=Booker |publisher=NPR |date=16 April 2020 |access-date=16 April 2020 |archive-date=16 April 2020 |archive-url= https://web.archive.org/web/20200416175358/https://www.npr.org/sections/coronavirus-live-updates/2020/04/16/835925031/japans-declares-nationwide-state-of-emergency-as-coronavirus-spreads |url-status=live}}</ref><ref name="416emergency">{{cite news |url= https://www.bloomberg.com/news/articles/2020-04-07/japan-s-abe-declares-state-of-emergency-over-coronavirus |title=Japan Declares Emergency For Tokyo, Osaka as Hospitals Fill Up |first1=Isabel |last1=Reynolds |first2=Emi |last2=Nobuhiro |publisher=Bloomberg |date=7 April 2020 |access-date=16 April 2020 |archive-date=8 April 2020 |archive-url= https://web.archive.org/web/20200408011125/https://www.bloomberg.com/news/articles/2020-04-07/japan-s-abe-declares-state-of-emergency-over-coronavirus |url-status=live}}</ref> Less than a quarter of Japanese people expected living conditions to improve in the coming decades.<ref>The Economist, 28 March 2020, page 4.</ref> In October 2020 during the pandemic, Japan and the [[United Kingdom]] formally signed the first free-trade agreement post-[[Brexit]], which will boost trade by approximately £15.2 billion. It enables tariff-free trade on 99% of exports to Japan.<ref>{{cite news |title=Britain signs first major post-Brexit trade deal with Japan |url= https://www.reuters.com/article/instant-article/idUSKBN2780HG |work=Reuters |date=23 October 2020 |access-date=23 October 2020 |archive-url= https://web.archive.org/web/20201023152555/https://www.reuters.com/article/britain-japan-trade/britain-signs-first-major-post-brexit-trade-deal-with-japan-idINKBN2780HG |archive-date=23 October 2020}}</ref><ref>{{cite web |title=UK and Japan agree historic free trade agreement |url= https://www.gov.uk/government/news/uk-and-japan-agree-historic-free-trade-agreement |publisher=Gov.uk (Government of the United Kingdom) |access-date=12 September 2020 |archive-url= https://web.archive.org/web/20200911085404/https://www.gov.uk/government/news/uk-and-japan-agree-historic-free-trade-agreement |archive-date=11 September 2020 |url-status=live}}</ref> On 15 February 2021, the Nikkei average breached the 30k benchmark, the highest since November 1991.<ref name="30kbenchmark" /> It was due to strong corporate earnings, GDP data and optimism over the [[COVID-19 vaccination in Japan|COVID-19 vaccination program]] in the country.<ref name="30kbenchmark">{{cite web |title=Nikkei index hits 30,000 for first time in three decades |work=Nikkei |url= https://asia.nikkei.com/Business/Markets/Nikkei-index-hits-30-000-for-first-time-in-three-decades |date=15 February 2021 |archive-url= https://web.archive.org/web/20210215143613/https://asia.nikkei.com/Business/Markets/Nikkei-index-hits-30-000-for-first-time-in-three-decades |archive-date=15 February 2021}}</ref>

=== Post-recession (2021–present) ===
At the end of March 2022, the [[Ministry of Finance (Japan)|Ministry of Finance]] announced that the national debt reached precisely 1.017 million billion yen.<ref name="medium">{{cite web |author=Sylvain Saurel |date=13 May 2022 |title=Japan Exceeds One Million Billion Yen in Debt — "Whatever It Takes" Has Become the Norm. |url= https://ssaurel.medium.com/japan-exceeds-one-million-billion-yen-in-debt-whatever-it-takes-has-become-the-norm-9adc5f501327 |archive-url= https://archive.today/20220513205120/https://ssaurel.medium.com/japan-exceeds-one-million-billion-yen-in-debt-whatever-it-takes-has-become-the-norm-9adc5f501327 |archive-date=13 May 2022 |work=Medium.com}}</ref> The total public debt of the country, which includes debts contracted by local governments, represents 1.210 million billion yen (9,200 billion dollars) which is nearly 250% of Japan's GDP.<ref name="medium" /> Economist Kohei Iwahara said such an exceptional debt to GDP level is only possible because Japanese hold most of the debt: "“Japanese households hold most of their savings in bank accounts (48%) and these sums are used by commercial banks to buy Japanese government bonds. Thus, 85.7% of these bonds are held by Japanese investors.”<ref name="medium" />

The [[Bank of Japan]]'s main policy aim since the Lost Decades started had been to end [[deflation]] and eventually achieve 2% [[inflation]].<ref name="japandebt" /> The increased international economic tension brought about by events such as the [[Russian invasion of Ukraine|Russian Invasion of Ukraine]] in 2022 finally helped the country achieve the much-anticipated inflation target of 2%, and the [[Negative interest rate|negative interest policy]] since 2016 was ended in March 2024.<ref name=":1" /><ref name=":2" /> However, while other major economies focus on suppressing inflation by raising interest rates, Japan aims to firmly establish inflation by maintaining low rates. As a side effect, the [[Japanese yen]] has become extremely weak, hitting a 37.5-year low of 161 yen/USD in July 2024.<ref>{{Cite web |date=30 April 2024 |title=The Yen Appreciates Greatly, Rising from 160 Yen/USD to 154 Yen/USD |url= https://www.nikkei.com/article/DGKKZO80360730Q4A430C2MM8000/ |access-date=2 June 2024 |work=[[The Nikkei]] |language=ja}}</ref><ref>{{Cite web |last=日本放送協会 |date=3 July 2024 |title=円相場 一時1ドル161円90銭台に 約37年半ぶりの円安水準更新 {{!}} NHK |url= https://www3.nhk.or.jp/news/html/20240703/k10014500461000.html |access-date=11 July 2024 |work=NHKニュース}}</ref> Furthermore, the [[Effective exchange rate|real effective exchange rate]] in May 2024, when the 2020 average is set at 100, is 68.65, the lowest level since the start of the Bank of Japan statistics in January 1970, due to a combination of low inflation in Japan and a relatively low trade share.<ref>{{Cite news |script-title=ja:円の実力、なぜ過去最低水準 金利差だけではない日本経済の「弱さ」：朝日新聞デジタル |trans-title=Why is the yen's strength at its lowest level ever? The weakness of the Japanese economy is not just due to the interest rate differential |work=Asahi Shimbun Digital |publisher=[[The Asahi Shimbun]] |url= https://www.asahi.com/articles/ASRDQ413ZRCQULFA014.html |date=25 December 2023 |access-date=13 April 2024 |language=ja |archive-date=30 January 2024 |archive-url= https://web.archive.org/web/20240130100406/https://www.asahi.com/articles/ASRDQ413ZRCQULFA014.html |url-status=live |url-access=subscription}}</ref><ref>{{Cite web |date=26 April 2024 |title=（時時刻刻）口先介入、薄れた効果 １カ月４円下落「市場に見透かされ」：朝日新聞デジタル |trans-title=(Time and Time) Lip service, faded effect, 4 yen drop in one month 'The market saw through' |work=Asahi Shimbun Digital |url= https://www.asahi.com/articles/DA3S15921049.html?iref=ogimage_rek |access-date=28 April 2024 |language=ja}}</ref><ref>{{Cite web |date=9 May 2024 |title=このままでは日本の伝統的企業が海外に買われていく…円安が止まらない日本を待ち受ける"最悪のシナリオ" 政府は円安政策を意図的に進めているように見える |trans-title=If things continue like this, traditional Japanese companies will be bought out by foreign companies...The 'worst case scenario' awaits Japan as the yen continues to depreciate.The government appears to be intentionally pursuing a policy of depreciating the yen. |url= https://president.jp/articles/-/81436 |access-date=13 May 2024 |work=PRESIDENT Online（プレジデントオンライン） |language=ja}}</ref><ref>{{Cite web |title=円の国際価値が過去最低、BIS ドルなどと大差、通貨地位揺らぐ |url= https://www.47news.jp/11086746.html |access-date=21 June 2024 |work=47NEWS |publisher=[[Kyodo News]] |language=ja}}</ref> This devaluation of the currency caused Japan to lose its status as the [[List of countries by GDP (nominal)|world’s third largest economy]] to [[Economy of Germany|Germany]] in nominal terms, which was approximately half the size of the country's economy a decade earlier.<ref name="Japan slips">{{cite news |last1=Montgomery |first1=Hanako |last2=He |first2=Laura |date=15 February 2024 |title=Japan slips into recession, allowing Germany to overtake as world's third-largest economy |url= https://edition.cnn.com/2024/02/14/economy/japan-economy-recession-hnk-intl/index.html |work=CNN }}</ref><ref name="McCurry">{{cite news |last1=McCurry |first1=Justin |date=15 February 2024 |title=Japan loses crown as world's third-largest economy after it slips into recession |url= https://www.theguardian.com/world/2024/feb/15/japan-recession-economy-falls-behind-germany-worlds-largest |work=The Guardian}}</ref><ref>{{Cite web |title=GDP - Gross Domestic Product 2012 {{!}} countryeconomy.com |url= https://countryeconomy.com/gdp?year=2012 |access-date=2 June 2024 |work=countryeconomy.com }}</ref>

Factors such as an apparent end to the 30-year struggle against deflation, improvements in corporate governance, and high corporate profits boosted the stock market. Consequently, both the [[Nikkei 225]] and [[TOPIX]] indices surpassed the record highs they reached more than 30 years ago in 2024. The market capitalisation of the Tokyo Stock Exchange’s prime section exceeded a quadrillion yen for the first time in July 2024.<ref>{{Cite web |date=4 July 2024 |title=Nikkei 225 reaches all-time-high, TSE's market cap reaches 1000 trillion yen |url= https://www.nikkei.com/article/DGXZQOUB010XY0R00C24A7000000/ |access-date=10 July 2024 |work=日本経済新聞 |language=ja}}</ref>