Bankruptcies in Japan hit 11-year high amid economic uncertainty

In fiscal 2024, Japan’s bankruptcy filings hit an 11-year high of 10,144, according to Tuesday’s report by credit research firm Tokyo Shoko Research (TSR). The number of bankruptcies rose 12% from the previous year and was the highest since 2013. Small and medium enterprises were particularly affected.

TSR believes the surge in bankruptcies was driven by increasing economic instability and uncertainty around the Bank of Japan’s schedule of raising interest rates.

The largest among recent bankruptcies was Mitsubishi Aircraft Corp. The company was liquidated after terminating the Mitsubishi SpaceJet project. This case symbolized mounting problems even among large businesses and dealt a blow to the government's ambitions in the aerospace industry.

The Bank of Japan is monitoring bankruptcy data as an important gauge of the economy’s health. Governor Kazuo Ueda highlights that further monetary tightening will depend on sustained wage hikes and consumption growth. An increase in bankruptcies, especially among small businesses, could adjust those plans, TSR notes.