As high interest rates, rising prices, and sluggish domestic demand persist, even long-standing business owners are being forced to close their doors. Last year, the number of businesses that shut down after operating for more than five years exceeded 310,000, marking the highest figure since relevant statistics began being tracked.
According to data from the National Tax Service released on July 6, the number of active businesses at the end of last year stood at 10,321,407, a 1.7% increase from the previous year. However, this growth rate is the lowest since 2005, when such statistics became available.
The growth rate of active businesses peaked at 7.5% in 2020, then declined to 6.4% in 2021, 5.1% in 2022, 2.8% in 2023, and 2.0% in 2024. Last year, the growth rate fell to the 1% range, indicating a significant slowdown in the increase of businesses.
A major factor contributing to this decline is the decrease in new business startups. Last year, 1,168,273 new businesses were established, a 4.1% drop from the previous year. This marks the fifth consecutive year of decline in new startups, the lowest number since 2014.
The total number of business closures reached 975,681. Although this figure is down 3.2% from the record high of over 1 million closures in 2024, the significant drop in new startups did not prevent the overall slowdown in the growth rate of active businesses.
The ratio of closures to new startups rose to 83.5%, meaning that for every 100 new businesses opened, more than 83 closed. This is the highest ratio recorded since 2013.
Notably, the increase in closures among long-standing businesses is particularly concerning. Last year, 317,406 businesses that had been operating for more than five years closed, the highest number since 2005.
Among all closures, 32.5% were businesses that had been in operation for over five years. This means that one in three closed businesses had been running for at least five years, a figure that has risen from 27.1% in 2020 over five consecutive years.
The primary reason for closures was poor business performance. Last year, 491,966 businesses closed due to poor performance, accounting for 50.4% of all closures. More than half of the closures were attributed to insufficient sales.
The food service industry, a key sector for self-employment, also experienced significant downturns. Last year, the number of active food service businesses fell by 1.9% to 798,969, dropping below 800,000.
New food service startups decreased by 13.6% to 130,114, marking the largest decline since comparable statistics began in 2011.
Conversely, food service closures outnumbered new startups, with 142,557 businesses shutting down, resulting in a net loss of 12,443 food service businesses. This figure is approximately five times larger than the previous year's net loss.
Long-established restaurants were not immune to the economic downturn. Last year, 41,659 restaurants that had been in operation for over five years closed, the highest number since 2007. Additionally, 2,797 restaurants that had been operating for over 20 years also shut down, setting a record.
The recent decision by Homeplus to terminate its rehabilitation process has also placed additional pressure on the self-employment sector. The closure of large supermarket stores could have a ripple effect on suppliers and surrounding businesses.
In response, the government has decided to provide emergency liquidity support totaling 440 billion won to small partner companies that rely on Homeplus. This includes 90 billion won in emergency management stabilization funds and 350 billion won in special guarantees from the Credit Guarantee Fund and the Technology Guarantee Fund.
* This article has been translated by AI.
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