Coronavirus pushes 140 companies to bankruptcy, 2 million workers could lose jobs in Japan

At least 141 Japanese companies have been pushed to bankruptcy since February due to the novel coronavirus, with more to get impacted towards the end of the month, according to a report released by Tokyo Shoko Research (TSR). Mostly smaller companies, related to tourism, hospitality, and restaurant business witnessed a decline of up to 80 percent profits as they struggled to survive in the face of the unpredictable impact of the pandemic. 

In a statement released for the fiscal year, the TSR estimated a total of 743 companies that went bankrupt in April, of which 71 were virus-related, compared to 645 in April last year, as per reports. Further, most of these small-scale businesses had difficulties in raising funds due to labour shortages and an increase of the consumption tax last year, the statement read. The coronavirus pandemic further enhanced their struggle.

Read: Japan Set To Approve First Antigen Testing Kits Amid Coronavirus Crisis

Read: Japanese Professional Soccer And Baseball To Remain In Shutdown

More than 600,000 can go bankrupt

As the world faces the biggest crisis in the global economy, Japanese companies incurred losses that amount to over ¥50 trillion in just one month while the national state of emergency is in effect, and businesses remained shut in the country, as per a local report. The aggregate net sales of 1.3 million companies nationwide, including small- and mid-sized businesses, totalled to ¥1.52 quadrillion in the year 2018, chief economist at Okasan Securities, Nobuyasu Atago estimated while speaking at a press conference. However, due to a sudden contraction of demand, the likes of which was not even witnessed during the economic crises in Japan’s history, several companies have now gone bankrupt, he added.  

As per Japanese business reports and tally, the unemployment rate in Japan continues to rise as well. A simulation on bankruptcies carried out by research and analysis firm Teikoku Databank in late April revealed that companies would steadily see a drop in sales by half, and if they did not receive financial support from the government, resulting in loss of jobs. More than 600,000 will be in danger of going bankrupt in 11 months, the report estimated. According to one calculation, an additional 2 million-plus workers will lose their jobs, and the unemployment rate will quickly spiral upward from 2.5% in March to 5.6% before the end of the year in Japan. 

Read: UK Economy Shrinks By 2% In First Quarter, March Witnesses Record Fall

Read: Australia Faces "sobering" Future Economy Due To Coronavirus

(Image Credit: AP)