Recently, a notable shift has occurred in the Japanese economy. The Japanese yen has reached a historic low, surpassing 160 yen per US dollar, a significant drop from 110 yen three years ago—approximately a 1.4 times decrease. The impact of this yen depreciation on the Japanese economy is severe.
Yen depreciation is not merely a currency issue but is particularly devastating for small and medium-sized enterprises (SMEs) and self-employed individuals. Many businesses are not closing due to external debts but due to a lack of a sustainable vision for the future, leading to a higher number of voluntary closures than bankruptcies.
During the COVID-19 pandemic, government subsidies and resources provided some cushioning, but now, with rising prices due to yen depreciation and reduced government support, SMEs are facing increased hardships. Import-dependent sectors, especially the food service industry, are severely affected. Not only import businesses but also small-scale restaurants and cafes are closing one after another. Beloved bakeries, ramen shops, and yakiniku restaurants are also sadly shutting down due to the burden of increased costs due to yen depreciation.
Considering that SMEs make up 99.7% of the Japanese economy, this issue does not seem to be a short-term problem. If yen depreciation continues, it could have a long-term impact on the entire Japanese economy.
Economic experts argue that the government needs to enhance support for SMEs and self-employed individuals and hasten measures to stabilize the exchange rate. These are essential actions, not only to protect the Japanese economy but also to preserve numerous jobs and maintain local communities.