Japan bankruptcies hit 10,425 as Middle East costs surge
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- Teikoku Databank reported total corporate bankruptcy cases in fiscal 2025 totaled 10,425, up 3.5% from the previous year and exceeding 10,000 for two straight years.
- Japan's business sentiment index fell to 42.2 in March from 48.9 in February, while the forward‑looking index dropped to 38.7 from 50.0.
- Middle East conflict (the US‑Israel attacks on Iran on Feb 28) triggered an oil price surge and supply disruptions, raising input costs for fuel, chemicals, plastics, construction materials, and fertilizers.
- Bank of Japan regional branch managers warned that the same oil costs and supply disruptions could hurt the economy and influence the central bank’s upcoming interest‑rate decision on Apr 27‑28.
- Japan may see a surge in bankruptcies from around summer, potentially increasing cases in fiscal 2026 as firms grapple with rising input and labour costs and labour shortages.
Why it matters: The rise in bankruptcies hurts creditors and workers while boosting demand for restructuring services, and the looming increase in cases could pressure the Bank of Japan to tighten policy at its April meeting, affecting borrowers and investors, potentially raising financing costs for firms.
