Japan registered 10,425 corporate bankruptcy cases in fiscal 2025, which ended in March, marking a 3.5% increase from the previous year and pushing the tally above 10,000 for a second consecutive fiscal year, according to data released by private research group Teikoku Databank.
The think tank said the rise in insolvencies reflected mounting pressure on firms from higher input costs and labour shortages. That strain was present even before a dramatic escalation of hostilities in the Middle East following the U.S.-Israel attacks on Iran on February 28, which Teikoku Databank said has since contributed to an oil price surge and disruptions to supply chains.
Teikoku Databank highlighted that companies are increasingly worried about the knock-on effects of rising crude oil prices. "There is growing concern among firms about rising input costs as surging crude oil prices have pushed up prices not just for fuel and chemical goods, but for a wide range of items" the group said, specifying products such as plastic goods, construction material and fertilisers.
Based on current trends, the think tank warned that Japan could experience a fresh wave of bankruptcies beginning around the summer months, adding that this would raise the likelihood of higher insolvency numbers in fiscal 2026. The assessment ties the pandemic-era stresses of labour constraints and cost inflation to a new shock from the international energy market.
The findings from Teikoku Databank mirror concerns expressed in a quarterly report compiled by regional managers of the Bank of Japan, released on the Monday preceding the think tank statement. That report warned that surging oil prices and related supply disruptions stemming from the Middle East conflict could inflict damage on the domestic economy.
Policymakers at the BOJ face a balancing act between the downside risks to growth posed by higher commodity prices and the inflationary pressures those same prices produce. That balance, the central bank has indicated through its regional managers and as referenced by Teikoku Databank, will be a central consideration in deciding whether to raise interest rates at the upcoming policy meeting scheduled for April 27-28.
As firms navigate higher input costs across sectors that use petroleum-derived feedstocks and materials, the think tank's warning underscores a potential shift in corporate solvency risks tied directly to recent geopolitical developments and the resulting market reactions.