The recent data from a credit research company in Japan revealed a concerning trend in corporate bankruptcies, with a 42.9 percent increase in May compared to the previous year, reaching a total of 1,009 cases. This marks the first time in about 11 years that monthly bankruptcies have exceeded 1,000, as many companies struggle to recover from the impact of the coronavirus pandemic.
Factors such as rising prices, labor shortages, and the need to repay debt acquired during the pandemic have contributed to this surge in bankruptcies. If the current trend continues, the annual number of bankruptcies is set to surpass 10,000 for the first time since 2013.
In May, 67 bankruptcies were companies that had received unsecured, interest-free loans as part of the government’s pandemic relief measures. Additionally, bankruptcies linked to elevated prices reached 87, the highest since the pandemic began.
Various industries have been impacted, with the service sector and construction sector being among the hardest hit. However, the majority of bankruptcies were small-scale, with debts less than 100 million yen ($637,000).
The challenging economic conditions, including a weak yen, inflation, and labor shortages, are likely to continue to increase the number of bankruptcies in the coming months, posing a significant threat to businesses in Japan.
© KYODO
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