Japanese Companies' Debt Increased by 9% Compared to Pre-COVID-19 Levels

▲ Haruhiko Kuroda, Governor of the Bank of Japan [Image source=Reuters News Agency]

[Asia Economy Reporter Kwon Jae-hee] It has been revealed that the debt of Japanese companies has increased further due to COVID-19.

According to data from the Japanese Cabinet Office on the 13th, the total debt of Japanese companies stood at 622.524 trillion yen (approximately 6650 trillion won) as of the end of last year, an increase of 52 trillion yen (about 555 trillion won) compared to a year earlier. This represents a sharp 9% rise.

The ratio of total corporate debt to Japan's gross domestic product (GDP) reached 115%, which is significantly higher compared to major countries such as the United States (84%), the United Kingdom (79%), and Germany (73%).

The sharp increase in Japanese corporate debt last year is analyzed to be due to more companies proactively securing operating funds in preparation for the prolonged COVID-19 situation by utilizing government financial support policies such as virtually interest-free and unsecured loans implemented as COVID-19 countermeasures.

Meanwhile, the business sentiment of large Japanese companies was found to have improved in the third quarter (July to September) of this year.

The Business Survey Index (BSI) for all industries of large companies, announced by the Ministry of Finance and the Cabinet Office on the same day, recorded a positive (+) 3.3 points, turning positive for the first time in three quarters.

This index is calculated by subtracting the percentage of companies that responded their business conditions worsened from the percentage of companies that responded their business conditions improved, so a positive figure means that there are more companies viewing the business conditions as improved.