Japan saw a surge in business bankruptcies in 2025, reaching a 12-year high as rising material costs and worsening labor shortages hit companies, according to a survey by Tokyo Shoko Research.
Last year, 10,300 companies went under, up 2.9% from 2024 and marking the fourth consecutive annual increase, though growth slowed from a 15.1% jump the previous year. Labor-shortage-related bankruptcies also hit a record 397 cases.
The data highlights the pressures of inflation and a tight job market on Japanese businesses, which could keep the Bank of Japan cautious on interest rates. Rising costs from a weak yen, lingering debt, trade tensions, and strained China relations were cited as additional risks.
A separate Cabinet Office survey showed that consumer-facing firms, such as retailers, experienced declining sentiment for the second straight month in December, with an index reading of 48.6. Rising living costs and fewer Chinese tourists were cited as factors affecting consumption and business performance.
