By AYUMI SUGIYAMA/ Staff Writer
June 11, 2024 at 15:22 JST
The building shown in this image housed a food service company that went bankrupt due to high prices in September 2023 in Hiroshima. (Asahi Shimbun file photo)
The weak yen and higher costs as well as the end of the financial assistance during COVID-19 pandemic are blamed for the high number of corporate bankruptcies in Japan, which rose by 42.9 percent year on year to 1,009 in May.
The number surpassed 1,000 for the first time for a month in more than a decade since July 2013, Tokyo Shoko Research Ltd., a private credit research firm, announced on June 10.
Bankruptcies increased year on year across all industries specifically due to high prices following the COVID-19 pandemic.
The number of bankruptcies increased in May for the 26th consecutive month, and the total debt of companies that went bankrupt in May totaled 136.7 billion yen ($870 million).
The number of bankruptcies increased year on year in all 10 industries including the service and construction sectors.
All industries except the retail and telecommunications industries recorded their highest monthly number for 2024 in May.
Bankruptcies attributed to high prices increased by 28 to 87, a record high since the COVID-19 pandemic.
The weaker yen pushed up import costs such as for raw materials and energy supplies, putting pressure on the profits of small and midsize companies.
Among bankruptcies blamed on high prices, the number was notably high in the construction and manufacturing industries.
The number of coronavirus-related bankruptcies surpassed 300, reaching 302, in May this year. It was the first time in about a year that the figure exceeded 300.
The number of companies that went bankrupt after utilizing “zero-zero loans,” essentially interest-free and requiring no collateral as a support measure for those hit hard by the COVID-19 pandemic, totaled 67 in May, equaling the highest number recorded in March.
Tokyo Shoko Research blamed the high numbers of bankruptcies on the weaker yen and rising costs, which are putting pressure on businesses, and sees no end in sight to the misery.
“It is highly likely that the number of bankruptcies will continue to increase,” the research firm said.
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