The number of corporate bankruptcies in Japan dropped to the lowest in 31 years in 2020, aided by government financial support amid the novel coronavirus pandemic, data released by a credit research company showed Wednesday.
Business failures with debts of at least 10 million yen ($96,000) fell 7.3 percent from 2019 to 7,773, the lowest since 1989 when 7,234 firms went bankrupt and the first decline in two years, according to data from Tokyo Shoko Research. The total includes 792 bankruptcies attributed to the pandemic.
The drop reflects the impact of the government's measures, including interest-free loans without collateral that helped small and medium-sized companies reeling amid the COVID-19 outbreak.
The number of bankruptcies with debts of below 10 million yen rose 23.0 percent to 630 in 2020, as the pandemic hit hard small businesses in the dining-out and tourism sectors, the research company said.
"Sales have not recovered yet at many companies, and the second state of emergency is also having a major impact on some sectors including the restaurant industry," said an official at Tokyo Shoko Research. "We may see an increase in the number of bankruptcies this year."
The government declared a state of emergency in Tokyo and three neighboring prefectures last week, nine months after its first declaration. The state of emergency was expanded Wednesday to seven additional prefectures.
The total liabilities left by bankrupt companies fell 14.3 percent from 2019 to 1.22 trillion yen ($11.7 billion) after some large bankruptcies with debts of more than 100 billion yen were seen the previous year.
By sector, information and communications posted the largest drop in corporate bankruptcies with a 22.1 percent fall, followed by the retail sector which saw a 14.3 percent decline to 1,054, the lowest since 1991, as demand for food and beverages grew amid stay-at-home requests.
But the service industry, including the restaurant and lodging sectors, saw a 1.1 percent rise to 2,596, increasing for a fifth straight year, after the number of inbound travelers to Japan plunged due to tighter border controls and people refrained from nonessential outings amid the spread of the virus.