Global business insolvencies are expected to rise by 5% in 2025, following a 10% surge in 2024, according to a recent forecast by Allianz Trade. The increase marks the continuation of a troubling trend, with insolvencies predicted to grow by 6% in 2025 and 3% in 2026, spanning five consecutive years of rising insolvency rates from 2022 through 2026.
The primary drivers behind the projected increase include delayed reductions in interest rates, ongoing economic uncertainty, and weak demand across various sectors. Allianz Trade emphasized that high interest rates could place significant strain on industries with heavy debt loads. Additionally, challenges such as the green transition, increasing competition from artificial intelligence, and persistent supply chain disruptions are expected to further stress businesses.
In the Asia-Pacific (APAC) region, insolvencies are anticipated to rise by 5% in 2025, followed by a 6% increase in 2026. Despite some regional variation, several markets in the region have already seen significant rises in insolvency rates in 2024. Countries such as Singapore (46%), Australia (41%), New Zealand (40%), Hong Kong (25%), South Korea (17%), and Japan (15%) experienced notable increases, with the construction, wholesale, and services sectors particularly hard-hit.
Looking ahead, while Australia, Singapore, and Japan may see a slight dip in insolvencies in 2025, countries like Taiwan (8%), South Korea (3%), and Hong Kong (2%) are expected to experience continued growth in insolvency rates. Weak external demand coupled with high interest rates are expected to be key factors contributing to these rises.
China, despite additional fiscal stimulus measures amounting to RMB 2.9 trillion, is also likely to see an increase in business insolvencies. Allianz Trade forecasts a 7% rise in 2025, followed by a 10% jump in 2026. The construction sector remains particularly vulnerable, and export-oriented firms could face ongoing challenges amid global trade headwinds.
Overall, Allianz Trade predicts a 5% rise in insolvencies across the APAC region in 2025 (1% excluding China), with a 6% increase in 2026 (a 4% decline excluding China). The outlook highlights the continuing pressure on businesses globally, particularly in light of economic instability and sector-specific challenges.
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