Part 9/11:
By 1992, the Japanese stock market index had fallen by 60% from its peak, resulting in a severe recession. Companies defaulted on loans, leading banks to create so-called zombie loans—non-performing loans that hindered competitive practices as banks tried to save large corporations from collapse. This further weakened the financial system and led to a banking crisis in 1997, marking the start of Japan's lost decades where economic growth stagnated to just 0.8% per year.
During this time, Japan’s labor market became inflexible, offering lifetime employment that limited job opportunities for younger generations. The rise of the hikikomori, or socially withdrawn individuals, symbolized the profound social challenges facing Japan as it battled economic malaise.