Japanese Bankruptcies Continue Double-Digit Growth for 5 Consecutive Months... Impact of COVID-19

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The number of companies going bankrupt in Japan increased by 15% year-on-year last month alone. Reflecting the economic impact of the novel coronavirus infection (COVID-19), this marks a double-digit increase for five consecutive months, surpassing the record during the 2008 global financial crisis (four consecutive months).

According to the preliminary nationwide corporate bankruptcy data for April from Tokyo Shoko Research, reported by Nihon Keizai Shimbun on the 13th, the number of bankruptcies was counted at 743 cases. Among these, 71 cases were related to COVID-19, bringing the cumulative total to 142. The newspaper explained, "Many business operators choose to close their businesses instead of declaring bankruptcy, so the 'hidden bankruptcies' are likely to be even higher."

By industry, the service sector, including accommodation and food services, recorded the highest number with 253 cases. This sector was hit directly due to movement restrictions imposed to prevent the spread of COVID-19. Additionally, 114 retail businesses went bankrupt, as profitability had already deteriorated before COVID-19 due to Japan's consumption tax increase in October last year.

Nihon Keizai stated, "Bankruptcies are spreading from small and micro enterprises to medium-sized companies," adding, "The suspension of economic activities due to COVID-19 has impacted corporate management regardless of industry or size, resulting in a double-digit increase in bankruptcies for five consecutive months." The number of employees who were employed by the bankrupt companies reached 6,990, exceeding 6,000 for the first time in five years.

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