Analysts attribute the trend to the after-effects of the pandemic
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The number of corporate bankruptcies in Japan soared to a five-year high in the first six months of 2023, Nikkei news outlet reported this week, citing a survey by credit research company Tokyo Shoko Research.
According to the report, a total of 4,042 companies filed for bankruptcy in the country in the reporting period, roughly 32% more than during the same time last year.
The rise in numbers that involved debts exceeding 10 million yen ($70,000) was attributed to the fact that many businesses have started repaying loans they took out to make up for the losses suffered in the Covid-19 pandemic.
Analysts noted the growth in material and labor costs as other reasons for the failures.
They said all 10 industry sectors covered by the survey showed a growth in corporate failures. The service sector was hit the worst with 1,351 bankruptcies, a 36.1% increase in annual terms, followed by the construction industry with 785 cases, up 36.3% year-on-year.
The total debt left by bankrupt companies, however, dropped by 45.3% to $6.6 billion compared to last year.
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Analysts warned that the number of bankruptcies could grow further, most notably among firms that have been worst hit by the pandemic and showed delays in recovery.
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