Japan. By August 1945, with Japan driven back on all fronts, a declaration of war by the Soviet Union and the release of atomic bombs on Hiroshima and Nagasaki, it was all over. Emperor Hirohito announced unconditional surrender. Japan was occupied until 1952 by US forces who aimed to demilitarise the country and dismantle the power of the emperor. A recovery programme enabled the economy to expand rapidly, and Japan became the world’s most successful export economy, generating massive trade surpluses and dominating such fields as electronics, robotics, computing, car production and banking.

With the arrival of the 1990s, the old certainties seemed to vanish: Japan’s legendary economic growth slowed to a virtual standstill; the conservative Liberal Democratic Party (LDP) was swept out of power and then back in again the next year; a massive earthquake in 1995 brought Kobe to its knees (a disaster made worse by a government that was slow to react); and to top it off, a millennial cult with doomsday ambitions engineered a poison gas attack on the Tokyo subway system.

Recent History
Things began to look up with the appointment of Keizo Obuchi, who took over after Prime Minister Hashimoto was ousted by a voter backlash over the shrinking economy. Obuchi ushered in a few brief years of economic vitality, but the job took its toll and he died while still in office from a massive stroke. His successor, LDP stalwart Yoshiro Mori, held the dubious honour of possessing the lowest approval rating of any leader in recent Japanese history, until he announced his resignation in early April 2001. Mori’s successor was the telegenic Junichiro Koizumi, who brought a beguiling mix of conservatism and reform to Japan’s top job. Promising to end the culture of high-level nepotism that had in part led to the deflation, he distinguishes himself with his charisma and dashing haircut. His energies seem to be paying off: Japan’s economy is ever-so-slowly climbing out of its deflationary hole in the ground.

Sports-mad eyes turned to Japan in 2002, when the country co-hosted the football World Cup with sometime rival Korea. Though perhaps labelling it a football-led recovery might be a little offside, the Japanese economy settled into a pattern of annual growth: Chinese demand rather than the beautiful game being the key driver.

The transition to a growing economy has not been stress-free however, as the country abandons many of its old ways of doing things – cradle-to-grave employment, age-based promotion, a strong social safety net, a preference for manufacturing over service industry – in favour of an economy based more closely on the American model. Now, rather than priding itself on being a country where everyone is a member of the middle class, there is talk of a nation composed of two distinct classes: the kachi-gumi (winners) and make-gumi (losers).

However strong the Japanese economy may be, the trade-weighted value of the yen is hovering at a 21-year low. While this means hard times for Japanese travellers abroad, it’s a boon for foreign travellers to Japan. In 2006, the number of foreign visitors to Japan topped seven million for the first time, with the greatest growth seen in visitors from other Asian countries: visitors from South Korea, China and Singapore were all up by over 20% compared with 2005. Increasing numbers of Western travellers are also coming to Japan.

all info taken from www.lonelyplanet.com