Japan’s corporate bankruptcies reached a twelve-year peak in 2025, as climbing input costs and persistent labor shortages placed significant pressure on businesses, according to a private sector survey released Tuesday.
The findings underscore growing headwinds from inflation and a constrained labor market environment, developments that could prompt the Bank of Japan to consider tightening its historically low interest rate policy.
Data compiled by Tokyo Shoko Research revealed that 10,300 companies ceased operations last year, the highest annual total since 2013. This represented a 2.9% year-on-year increase, marking the fourth consecutive rise in bankruptcies, although this increase moderated from the 15.1% surge recorded in 2024.
With the yen remaining weak and prices continuing to accelerate, companies that hesitate to eliminate surplus debt may face further difficulties, including higher borrowing costs, tariffs imposed by the Trump administration, and deteriorating trade relations with China, Tokyo Shoko Research stated in its report.
The study also indicated that business failures linked to labor shortages climbed to a record 397 cases in 2025.
Separately, fresh government figures released on Tuesday signaled that sentiment among consumer-facing firms, such as those in retail, declined for the second month running in December. The Cabinet Office’s survey found that the business conditions index for these sectors dipped to 48.6 in December, down by 0.1 point compared to November.
Feedback included in the Cabinet Office report highlighted retailers citing constrained consumer spending due to rising living expenses. Additionally, a travel agency in western Japan noted an ongoing lack of recovery in inbound tourism from China, which continues to weigh on its outlook, according to the same survey.
