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Allianz Trade Insolvency Report
Global Banking & Finance Review®
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Allianz Trade releases today its latest Global Insolvency Report and unveils updated forecasts for 2025 and 2026. According to the world’s leading trade credit insurer, global business insolvencies will keep rising over the next two years: after +10% in 2024, they are expected to grow by +6% in 2025 and +3% in 2026. This would result in five successive years of increasing insolvencies (2022–2026).
2025-2026: The rise in global business insolvencies is far from over
“We expect global business insolvencies to increase by +6% in 2025 and +3% in 2026. This upward adjustment results from the risk of delayed easing of interest rates, increased uncertainty and soft demand. Relatively high interest rates could strain highly leveraged sectors and corporates, as well as those that have specific challenges to finance – such as the green transition, AI competition or supply-chain frictions. At the same time, prolonged uncertainty could leave companies in wait-and-see mode, leading to reduced activity to the detriment of already fragile corporates. Meanwhile, there are also other risk factors, such as the persistent lack of economic momentum and the post-Covid clearance of the backlog of insolvencies. The business environment has rarely been so complex and volatile, and corporates should remain alert to avoid non-payment risk”, explains Aylin Somersan Coqui, CEO of Allianz Trade.
Asia Pacific: business insolvencies to increase by +5% in 2025 and +6% in 2026
The region ended 2024 with higher-than-expected increases in most markets, notably in Singapore (+46%), Australia (+41%), New Zealand (+40%), Hong Kong (+25%), South Korea (+17%) and Japan (+15%), particularly in the construction, wholesale and services sectors. Three of the abovementioned countries that hit top highs in 2024, namely Australia (historical high), Singapore (24-year record) and Japan (11-year record), could see a moderate downside trend reversal in 2025. Markets such as Taiwan (+8%), South Korea (+3%) and Hong Kong (+2%) will see insolvencies continue to rise in 2025 as a result of weaker external demand and lagging effects of prolonged high levels of interest rate.
As for China, despite the additional fiscal stimulus of RMB2.9tn announced for 2025, we expect the economic slowdown to support a gradual increase in business insolvencies, reaching +7% and +10% in 2025 and 2026 respectively. Construction is likely to remain in the doldrums in 2025 despite first signs of a potential bottoming out in real estate demand, while worries are likely to expand to more export-oriented firms, as they will continue to face headwinds from global trade due to China’s position in the global supply chain. Overall, at the regional level, we estimate insolvencies to increase by +5% in 2025 (+1% without China) followed by +6% in 2026 (-4% without China).
High interest rates and a potential trade war could drive global insolvencies even higher
Expanding credit can help reduce corporate insolvencies by providing businesses with liquidity to manage debt obligations, sustain operations and invest in growth. Access to credit enables firms to refinance liabilities, bridge revenue shortfalls and avoid bankruptcies, particularly during economic downturns. Although, Allianz Trade expects interest rates to decline both in Europe and in the US, inflationary risks, especially in the US could threaten rate cuts. Should borrowing costs rise making credit less accessible, this could lead to a slowdown in credit growth, tightening financial conditions and increasing default risks for highly leveraged firms. Allianz Trade’s estimates suggest that a 1% decrease in credit would result in an increase in insolvencies in the next three months by about +3% in the US, +0.4% in Germany, +1% in the UK and +2% in France.
But according to Allianz Trade, the main upward risk is the trade war looming ahead. “Our insolvency outlook could deteriorate should the European economy perform weaker than expected, with a stronger lack of momentum, or if there is a weaker resilience in APAC and larger headwinds from China, as well as if the outlook for the US deteriorates further. Geopolitics could also be a major factor of turbulence, with the ongoing conflicts in Russia-Ukraine and the But according to Allianz Trade, the main upward risk is the trade war looming ahead. “Our insolvency outlook could deteriorate should the European economy perform weaker than expected, with a stronger lack of momentum, or if there is a weaker resilience in APAC and larger headwinds from China, as well as if the outlook for the US deteriorates further. Geopolitics could also be a major factor of turbulence, with the ongoing conflicts in Russia-Ukraine and the Middle East, tensions in the South China Sea and with political uncertainties over Taiwan. A full-fledged trade war would increase our insolvency forecast by an additional +2.1pp in 2025 and +4.8pps in 2026, meaning that global business insolvencies would rise by +7.8% and +8.3% respectively. For 2025-2026, this would mean +6,800 additional cases in the US and +9,100 in Western Europe”, concludes Maxime Lemerle, Lead Analyst for insolvency research at Allianz Trade.
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