Business insolvencies are forecast to continue increasing over the next two years, with global cases projected to rise by 6% in 2025 and 3% in 2026, according to Allianz Trade’s latest Global Insolvency Report.
If these trends hold, it will mark five consecutive years of rising insolvencies since 2022, the trade credit insurer said.
The prolonged strain of high interest rates, economic uncertainty, and slower consumer demand are among the key factors contributing to the continued rise in corporate insolvencies.
Allianz Trade CEO Aylin Somersan Coqui (pictured) noted that businesses in capital-intensive sectors, including green energy, artificial intelligence, and supply chain logistics, may face increased financial stress due to difficulties in securing funding.
“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,” she said.
She added that a backlog of insolvencies that were delayed due to pandemic-related support measures continues to work its way through the system, further influencing the upward trend.
“The business environment has rarely been so complex and volatile, and corporates should remain alert to avoid non-payment risk,” she said.
Business failures surged in several Asia-Pacific markets in 2024, with notable increases recorded in Singapore (46%), Australia (41%), New Zealand (40%), Hong Kong (25%), South Korea (17%), and Japan (15%). The construction, wholesale, and service industries were among the hardest hit.
While some markets, including Australia, Singapore, and Japan, may see a moderation in insolvencies in 2025, other economies – such as Taiwan (8%), South Korea (3%), and Hong Kong (2%) – are expected to continue experiencing increases, primarily due to subdued trade demand and prolonged financial pressures.
China is forecasted to see a 7% rise in insolvencies in 2025, followed by a 10% increase in 2026, despite fiscal stimulus measures amounting to RMB2.9 trillion. Allianz Trade attributed this to continued weaknesses in the construction sector and financial pressures on export-driven businesses.
Across the Asia-Pacific region, insolvencies are expected to grow by 5% in 2025 and 6% in 2026, although when excluding China, these figures would be 1% and -4%, respectively.
In a separate report, Allianz identified cyber threats as the leading business risk for 2025, followed by business interruption and natural disasters.
The Allianz Risk Barometer survey, which gathered insights from 3,778 industry professionals across 106 countries, found that 38% of respondents ranked cyber risk as their primary concern.
Business interruption ranked as the second-highest risk, with 31% of respondents citing it as a top concern.
Extreme weather events continued to be a major issue for businesses in 2024, pushing natural disasters to the third spot on the Allianz Risk Barometer. The report noted that insured losses from climate-related disasters exceeded US$100 billion for the fifth consecutive year.
Climate change rose to fifth place in the rankings, reflecting increased regulatory pressure and growing concerns over climate-related business disruptions.
Regulatory and legislative changes ranked fourth in the Allianz Risk Barometer, with compliance-related challenges rising in significance, particularly in Australia. Businesses are focusing on improving risk mitigation strategies in response to evolving cyber security requirements and environmental disclosure regulations.
