Corporate bankruptcies surged 22 percent in the first half from a year earlier to the highest in a decade, largely due to rising costs and labor shortages, and shrinking financial support in Japan, according to a recent survey from a credit research firm.
According to Teikoku Databank of Japan, the number of bankruptcies totaled as high as 4,887 for January to June, the highest since 2014. Service industry bankruptcies were the highest, at 1,228, followed by retail and construction at 917, showing its across-industry effect.
The small and micro-enterprises were at greatest number in closure. Because of this, they really took a great blow, especially with the withdrawal of so-called "zero-zero loans" that were trying to ease the economic impact of COVID-19. Offered without interest and collateral by private and government-linked financial institutions, these loans had been playing a vital role in bailing out businesses in dire straits.
The economic scenario becomes even more complex due to the depreciated value of the yen, which has added to the financial stress with increasing operational costs and a tight labor market. Teikoku Databank estimated that bankruptcies would keep on climbing and might cross 10,000 by the year 2024 amid sluggish consumer spending.
In June alone, 807 Japanese companies began procedures for legal liquidation, marking the 26th consecutive month of a year-on-year increase, which reflects that businesses across the country are still in pain.
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