Over 50 Percent of Japan’s SME Sector No Longer Need Emergency Cash Injections

“The government's initial relief scheme (for small and medium-sized businesses) was about injection... after injection of money.”

The Covid-19 pandemic hit businesses worldwide, forcing many to shut down. Fearing job losses, governments across continents approved injections of cash. Certainly, this was an ideal approach to counter losses. Businesses were going down, so was the world economy. Even though Japan being one of the top five world economies, it also suffered huge losses with small and medium-sized businesses affected the most. However, the Japanese stood up and injected trillions of Yen into the private sector.

Currently, as many as 57 percent of the Japanese small and medium-sized businesses saying that they no longer needed emergency funds, a Reuters report said. Needless to say, the emergency package helped bring down corporate bankruptcies a three-decade low by 7.2 percent last year to 7,773. A Japan-based credit reporting agency, Tokyo Shoko Research, confirmed the numbers. The agency had conducted a survey.

“The government’s initial relief scheme (for small and medium-sized businesses) was about injection... after injection of money,” said Mitsuhiro Harada, Shoko’s Research Division Director.

Even though the Japanese have pumped cash injections, 68 percent of the country’s SMEs in July posted lower sales than pre-Covid time. In other words, sales were higher in July 2019.

Long story short, Japan’s SME sector is yet to recover fully.