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Japan

Index

Economic Recovery Is Followed by Deep Recession

Japan's postwar economic recovery was nothing short of remarkable. New technologies and manufacturing were undertaken with great success. A shrewd trade policy gave Japan larger shares in many Western markets, an imbalance that caused some tensions with the U.S. The close involvement of Japanese government in the country's banking and industry produced accusations of protectionism. Yet economic growth continued through the 1970s and 1980s, eventually making Japan the world's second-largest economy (after the U.S.).

During the 1990s, Japan suffered an economic downturn prompted by scandals involving government officials, bankers, and leaders of industry. Japan succumbed to the Asian economic crisis in 1998, experiencing its worst recession since World War II. These setbacks led to the resignation of Prime Minister Ryutaro Hashimoto in July 1998. He was replaced by Keizo Obuchi. In 1999, Japan seemed to make slight progress in an economic recovery. Prime Minister Obuchi died of a stroke in May 2000 and was succeeded by Yoshiro Mori, whose administration was dogged by scandal and blunders from the outset.