Having just returned home and still bearing the brunt of jetlag, Japan, the second most developed nation in the world, was a sight worth seeing. Many cultural miles away to the norm we are used to, the experiences absorbed were a good sample to understanding the Japanese way of life.

Japan has for years battled deflation and till today still adopts dovish policy measures to re inflate the economy. It is difficult to understand how the country remains stagnant despite the robustness of its infrastructural, engineering and technological sectors.

The cleanliness and punctuality was a factor that struck me the most over my stay. The number of skyscraper projects under construction around central Tokyo were abundant, which supports the infrastructural sector’s contribution to Japan’s low unemployment rate currently at ca. 3%. Furthermore, the Shinkansen railway and underground systems were one of the most modern and punctual I have encountered, where an abundance of railway employees was also visibly notable.

Hence with such low unemployment, why is the economy stagnating?

The answer goes back twenty years, to the ‘Lost decade’ as it is called, following the bursting of the asset price bubble of 1992. Japanese banks throughout the late 80’s created a credit boom and lent money with much disregard to the quality of the borrowers, racking up dangerous debt levels, inflating stock market assets and property.

The Bank of Japan’s low interest rate environment in the late 80’s, led policymakers to tighten policy measures to control resulting inflation, yet by doing so the property and stock market asset bubbles burst, plunging Japan into a decade of declining GDP growth and stagnant consumer prices.

The following decade, leading up to 2010, was eventually considered as part of the ‘Lost decade’ due to the continuous struggles by the Bank of Japan in reflating the economy through dovish monetary policy measures.

Though by what is called a Liquidity trap, monetary policy measures alone have been ineffective in getting Japan out of its deflationary struggles, whereby deflation, has caused investors to hold on to cash, hampering consumer demand and causing additional monetary easing at 0% real interest rates to be ineffective.

In fact, since 2012, the monetary easing stances undertaken, coupled with fiscal reforms by Prime Minister Shinzo Abe, in the battle to boost inflation has become known as Abenomics.

Today, things are improving albeit at a slow pace. Reforms have been noted throughout the late 90’s, which have contributed positively to GDP, especially through means of temporary employment contracts. Traditional Japanese employment culture usually sees employees loyal and committed to an employee for a number if not all of their working years.

The main problem Japan is now facing is an aging population, with the potential of affecting long term GDP growth targets including those prior to the ‘Lost decade’.

I have been warned countless times on travelling to Japan due to it being an expensive country. Yet, while true, such a statement may have applied more to 20 years ago and it is in fact, based on my experience, only as expensive as one wishes to make it.

Today, inflation and purchasing power for the foreign visitor, doesn’t make Tokyo any more expensive to London, Geneva or Paris, given the stagnant prices and ongoing monetary efforts in boosting inflation.

In fact I enjoyed countless Ramen, Yakiniku, Okonomiyaki and Sushi dishes without forgetting the Sake, all at reasonable prices. I will however spare the lengthy elaborations for Trip Advisor.