Japan business failures hit 12-year high in fiscal 2025

The number of business failures in the service sector, including restaurants, increased 5.5% to 3,585 in fiscal 2025, a record high
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The number of corporate bankruptcies in Japan with debts of at least ¥10 million ($63,160) in fiscal 2025, which ended last month, rose 3.5% from the previous year to a 12-year high, Tokyo Shoko Research said Wednesday.The figure reached 10,505, up for the fourth straight year, reflecting a rise in failures among small companies.Business failures linked to labor shortages or rising labor costs climbed to a record high of 442 cases
Failures stemming from inflation also increased.Bankruptcies rose in five out of the 10 sectors surveyed.In the service sector, including restaurants, the number increased 5.5% to 3,585, also a record high
As food and utility costs continued to rise with no sign of easing, many companies were unable to raise prices and fell into financial difficulties.The agriculture, forestry, fisheries and mining sector, along with the construction, retail and real estate industries, also recorded more business failures than the previous year.Total liabilities incurred by failed companies shrank 33.9% to ¥1.56 trillion, falling to the ¥1 trillion range for the first time in four years
Of the total, cases involving liabilities of less than ¥100 million accounted for 76.7%, highlighting an increase in bankruptcies among small firms and microbusinesses.In March alone, the number of bankruptcies climbed 8.3% year on year to 924, with total liabilities increasing 16.5% to ¥114.8 billion.A Tokyo Shoko Research official said that inflation driven by the weak yen could "put pressure on the cash flow of small- and medium-sized enterprises with weak earnings" as the situation in the Middle East starts to affect businesses.The official predicted that "corporate failures are likely to continue rising."
KEYWORDS
bankruptcy(https://www.japantimes.co.jp/tag/bankruptcy), Japanese economy(https://www.japantimes.co.jp/tag/japanese-economy), economic indicators(https://www.japantimes.co.jp/tag/economic-indicators)
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