Aside from the high-growth era when the average annual rate of economic growth was slightly below 10 percent, in the 1980s the average annual growth rate was around 4.5 percent, which exceeded the growth rates of other advanced economies. However, following the collapse of the bubble, Japan’s annual growth rate declined significantly to around 1.5 percent in the 1990s.
It has then increased somewhat since the turn of the millennium, but the trend decline in the growth rate continues. In this situation, people will have lower expectations concerning future income growth and their spending and investment will be restrained, which will in turn lead to price declines.