Corporate bankruptcy surged for 10 consecutive months in Japan!
Japan is one of the largest economies in the world and a major contributor to global economic growth. However, in recent years, the Japanese yen has depreciated continuously, falling below $4 trillion for the first time, and the economy has already entered a long-term stagnation.
Tokyo’s CPI rose to 4.3% in January, the highest in 42 years
Data show that Tokyo’s core CPIexcluding fresh food rose 4.3% year-on-year in January, the highest level since 1981 and higher than the Bank of Japan’s inflation target for the eighth consecutive month. Of the 522 products surveyed for the core CPI data, prices rose for 376 products, according to Interior Ministry officials. Food prices will continue to rise in 2023, according to Teikoku Databank, Japan’s largest credit survey agency. The agency expects prices to rise for at least 7,100 products this year. In addition, another data report showed that Japanese household spending fell 1.2% year-on-year in November, the first decline in six months, indicating that a wave of inflation may have hit household spending.
The trade deficit will be nearly 20 trillion yen in 2022
According to statistics on the 19th of this month, Japan’s trade deficit in 2022 is 19.9713 trillion yen, a record high since comparable data were available in 1979. The data shows that Japan’s import volume in 2022 is 118.1573 trillion yen, an increase of 39.2% over the previous year, exceeding 100 trillion yen for the first time. The export volume is 98.186 trillion yen, an increase of 18.2% over the previous year. According to a report by Japan Broadcasting Association TV on the 19th, affected by the sharp depreciation of the yen and the soaring energy prices, Japan’s imports expanded in 2022, resulting in a new high in the trade deficit. Japanese Chief Cabinet Secretary Hirokazu Matsuno said at a conference that the operating income of Japanese companies is expanding. In addition to exporting, Japanese companies are earning income through overseas investment. At the same time, Hirokazu Matsuno emphasized that export is still an important way to stimulate Japan’s economic growth, and the government will strongly support it.
Japanese corporate bankruptcies rise for 10 months
The Tokyo Shoko Research Company announced on the 8th that the number of corporate bankruptcies in Japan in January was 570, an increase of 26.1% over the same period last year, and it has increased for 10 consecutive months. The report pointed out that all of the bankrupt companies were small and medium-sized enterprises for four consecutive months. With the continuous rise in prices of food and energy, small and medium-sized enterprises that are difficult to pass on prices to transaction customers and consumers have been affected. In addition, total liabilities decreased by 15.6% year-on-year to 56.524 billion yen, the lowest level in the same month since 1973. This is because 60% of bankrupt companies have debts of less than 50 million yen.
Prior to this, the Japanese government urgently issued a rescue plan of 71.6 trillion yen, and the governor of the Bank of Japan reiterated the policy of continuing to adhere to large-scale financial easing. Analysis generally believes that exiting easing and following up interest rate hikes may temporarily stop the depreciation of the yen, but the Japanese economy has been unable to bear the huge cost of interest rate hikes. At present, the Japanese government debt is high, and the fiscal revenue in 2022 depends on the issuance of national bonds by more than 34%. If the process of raising interest rates is started, the government will face greater pressure on debt repayment and interest payment. According to estimates by the Ministry of Finance of Japan, if interest rates rise by 1%, interest and principal payments on Japanese government bonds in the fiscal year 2025 will increase by 3.7 trillion yen more than expected. This is also the main reason why Japan does not raise interest rates simultaneously with other countries and the monetary policy is difficult to change.
