Japan is facing severe economic challenges after Tokyo Shoko Research reported a surge in the number of companies going out of business through June 2026. A total of 5,346 companies declared bankruptcy, representing a 7.1% increase compared to the same period last year.
The weakening of the yen has been a central factor driving inflation in goods prices. This condition has placed heavy financial pressure on business owners, particularly small and medium-sized enterprises with limited capital. As many as 90% of the closed businesses are small-scale entities with fewer than 10 employees.
The debt structure of the collapsed companies is also significant. The majority, or about 80% of total failed businesses, had debt liabilities below 100 million yen. Beyond financial burdens, a prolonged labor shortage has become a crucial operational constraint, sparking fears that the bankruptcy trend will continue to rise sharply heading into the coming autumn.
Sector-wise, services was the hardest hit with 1,819 cases, followed by the construction sector with 1,026 cases. Business owners, especially in the restaurant and food retail industries, are now at a low point due to the difficulty of passing production costs onto consumers amid declining purchasing power.
This condition is widespread across nearly all regions of Japan, with bankruptcy numbers rising in nine regions except Tohoku. The Hokuriku region recorded the most extreme spike of 37.3%, followed by Hokkaido with a 17.1% increase.
