Rising costs and labour shortages drive corporate bankruptcies to decade high in Japan
Corporate bankruptcies in Japan surged 22 percent year on year to a decade high in the first half of the year due to rising costs, labour shortages, and waning financial support, according to a recent survey by a credit research company.
The total number of bankruptcies from January to June came to 4,887, the highest since 2014, Japan’s Teikoku Databank said in its latest online report, Xinhua news agency reported.
By industry, the service industry had the largest number at 1,228, followed by retail with 1,029 and construction with 917, the data showed.
During the COVID-19 pandemic recovery period, small and micro enterprises faced significant challenges, particularly with the uptake of “zero-zero loans” from private-sector and government-affiliated financial institutions. These loans, which offered no interest and required no collateral, were intended to mitigate the pandemic’s economic impact but posed varying levels of financial strain.
Adding to the complexity of Japan’s economic landscape is the ongoing depreciation of the yen, coupled with escalating costs and a mounting shortage of labor. These factors have compounded difficulties for businesses already navigating uncertain market conditions.
Teikoku predicted that on top of the lackluster personal consumption, the number of corporate bankruptcies is expected to rise further, possibly exceeding 10,000 in 2024.
In June alone, a total of 807 Japanese companies began legal liquidation proceedings, marking the 26th consecutive month of year-on-year growth, the report said.
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