Tokyo Shoko Researchs July 10 survey revealed that Japanese SME bankruptcies in H1 2023 rose 30% year-on-year, exceeding 4,000 cases in six months for the first time.

Despite Japanese government subsidies helping businesses survive COVID-19, SMEs now operate amid severe labor shortages and soaring prices.

Domestic factors like high inflation and chronic labor shortages, coupled with external challenges like weak global growth and shrinking overseas orders, hinder Japans recovery. Declining real wages further suppress household purchasing power.

Japans Ministry of Economy, Trade and Industry data shows a 1.6% month-on-month drop in Mays industrial production index, still below pre-pandemic levels.

Japans corporate equipment investment remains weak due to export declines. Economist Yoshitaka Shinke warns this key growth drivers stagnation creates economic uncertainty.

In H1 2023, 4,042 Japanese firms with debts exceeding ￥10 million (≈$70,400) went bankrupt, up 32% year-on-year. Increases occurred across manufacturing, construction, retail, and foodservice sectors.

Toshihiro Fujii of Teikoku Databank warns more bankruptcies will follow unless material cost hikes and labor shortages are resolved.