A survey by Tokyo Shoko Research reveals that corporate bankruptcies in Japan reached a 12-year high in 2025, driven by the dual pressures of soaring raw material expenses and a severe labor crisis. This marked the fourth consecutive year of rising failures, with over 10,000 firms collapsing—the most since 2013. The data suggests that persistent inflation and a shrinking workforce are creating significant hurdles for the private sector, potentially complicating the Bank of Japan’s plans regarding interest rate hikes.
The research firm noted that the weak yen continues to drive up costs, leaving debt-heavy companies vulnerable to further risks, including potential trade tariffs and strained diplomatic ties with China. Notably, business failures specifically attributed to labor shortages hit a record high last year, highlighting the difficulty companies face in maintaining operations amid a tight job market.
Further compounding these concerns, a government report released on Tuesday indicates that confidence among consumer-facing businesses, such as retailers, declined for the second month in a row this past December. Business owners cited the rising cost of living as a major deterrent to consumer spending, while the travel industry expressed concern over the continued lack of Chinese tourists. These combined factors suggest a challenging outlook for Japan’s domestic economy heading into the new year.
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