Japan is grappling with a significant rise in personal debt, driven by increasing interest rates and living costs. In 2023, consumer loans surged at the highest rate in 16 years, leading to household borrowing exceeding incomes for the first time. As a result, personal bankruptcies are projected to reach their highest level since 2012, with over 70,000 filings anticipated this year [59b2da22].
The financial strain has also led to a troubling increase in suicides related to debt, which rose to 792 in 2023, marking the highest figure since 2012. The average household debt in Japan reached ¥6.55 million (approximately S$56,000), while average wages were about US$47,000—significantly lower than the U.S. average of around US$80,000 [59b2da22].
The ratio of household debt to disposable income hit a record 122% in 2022, indicating a precarious financial situation for many families. Consumer lending continued to grow by over 8% monthly through September 2024, exacerbating the debt crisis [59b2da22].
The lowering of the age of adulthood to 18 in 2022 has further increased the pool of potential borrowers, raising concerns about financial literacy among young adults. Unfortunately, financial literacy remains low among the general population, leaving many ill-equipped to manage their debts effectively [59b2da22].
In light of these challenges, mental health resources are being made available for those in distress, as the social implications of this financial crisis become increasingly evident. The Japanese government and various organizations are urged to address the rising tide of bankruptcies and suicides linked to debt, highlighting the urgent need for comprehensive financial education and support systems [59b2da22].