by BLOOMBERG / pic by BLOOMBERG
After an odd event last month where Japan’s bankruptcies fell the most since the 1960s, the impact of the pandemic is now evident with a growing number of businesses failing.
Some 780 Japanese firms filed for bankruptcy last month, 148% more than the prior month and the most this year, according to Tokyo Shoko Research Ltd. In May, the numbers were low because the courts weren’t operating at full capacity due to a national state of emergency.
There were 94 pandemic-driven cases last month according to TSR, the highest number yet, bringing the total to 240 in the first half of the year. Unsurprisingly, sectors such as hotels and restaurants were badly hit as the pandemic forced people to stay indoors and cut off a steady stream of tourists from abroad.
Growing distress among businesses is in line with the record jump in bank loans and deposits in June, as companies continued to tap emergency credit facilities and hoard cash.
The Japanese government has so far pledged virus-response measures worth around 40% of gross domestic product to help households and companies. Yet, much of it has remained stuck in the country’s dated and complex administrative pipeline, a problem compounded by a lack of staff.
While the government is expected to compile another extra budget to support the economy later in the year, the Bank of Japan is seen standing pat when it meets next week.