Business closures near 1 million last year, highest since 2006

The number of business owners who filed for business closure approached 1 million last year, the highest number since related data began to be compiled in 2006.

Business closures stood at about 986,400 in 2023, a near 14 percent increase from the previous year’s 867,200, shows data from the National Tax Service. The tally hovered around 800,000 between 2020 and 2022, before surging last year.

The most common reason cited for closures was poor business performance, accounting for about 482,100 cases. This was followed by unspecified reasons (451,203) and business transfers and acquisitions (40,369).

By sector, retail accounted for the largest number of closures at 276,500, among them services and restaurants being the hardest hit industries.

Due to the poor housing market last year, real estate-related businesses suffered, data shows, with real estate rental segment reporting about 94,330 closures and construction 48,608.

"There is a possibility of domestic demand recovery in the second half of the year as prices stabilize and interest rates may fall,” said Kim Gwang-seok, head of the economic research division at the Institute for Korean Economy & Industry.

“However, it is unlikely that sales will recover sufficiently to alleviate the debt burden of self-employed individuals and small business owners immediately, so the number of business closures is likely to continue increasing."