Japan Corporate Bankruptcies Climb to Near-Record High

(MENAFN) Corporate failures in Japan climbed sharply in April, with a new survey revealing that rising prices, a weakening yen, and mounting geopolitical pressures are squeezing businesses at an accelerating pace.

The number of corporate bankruptcies involving liabilities of at least 10 million yen — roughly 63,375 U.S. dollars — rose 6.6 percent year on year to 883 cases last month, according to data released Wednesday by credit research firm Tokyo Shoko Research.

Inflation-driven failures proved particularly alarming, hitting 85 cases — the third-highest level ever recorded — as yen depreciation drove up the cost of imported raw materials and energy for Japanese firms.

The survey painted a broader picture of structural strain. Beyond inflation-related cost pressures, surging labor expenses and rising interest rates are steadily eating into corporate profit margins, leaving a growing number of businesses grappling with acute cash flow challenges.

Supply-side shocks are compounding the problem, with naphtha shortages and spiking crude oil prices — both linked to the ongoing Middle East conflict — fueling additional uncertainty across industries.

A Tokyo Shoko Research official warned that conditions could deteriorate further. The business environment "will become even more severe" if disruptions in the Strait of Hormuz linger, raising the possibility that bankruptcies could trend upward into the summer months.

Sector-by-sector data showed bankruptcy filings rising annually across seven industries, including construction, manufacturing, and wholesale. Construction bore the heaviest toll, surging 21.7 percent to 185 cases — a figure driven in part by weakening home-buying demand amid soaring property prices and elevated mortgage rates.

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