Japan firms squeezed by rising costs

Corporate bankruptcies in Japan reached a 13-year peak during the April-September period due to soaring prices and increased labor costs, particularly impacting smaller businesses, according to a credit research firm. The number of failures, involving debts of at least 10 million yen, climbed 3.9 percent from the previous year to 5,373 cases, as reported by Tokyo Shoko Research. The total liabilities left behind by these bankrupt companies surged 23.6 percent to 856.1 billion yen over the six-month span.

A Tokyo Shoko Research official cautioned that higher costs for crude oil and other supplies, caused by the unrest in the Middle East, along with elevated borrowing expenses following the Bank of Japan's interest rate hikes, would exert additional pressure on businesses. The official stated, "More companies with weak financial positions will be forced out of business."

The ongoing conflict between the United States, Israel, and Iran has disrupted crude oil supplies, leading to a rise in energy and material costs. Japan relies heavily on Middle East oil imports, making it particularly vulnerable to these fluctuations. The Bank of Japan raised its policy rate to 1.25 percent in the previous month, marking its highest level in 31 years, as it strives to prevent inflation from exceeding its 2 percent target.