Insolvencies rise faster than expected worldwide
Insolvencies are rising much faster than expected - both in Germany and worldwide. The world's leading credit insurer Allianz Trade has revised its forecasts upwards in its insolvency study published today. Following an increase of ten percent in 2024, Allianz Trade expects a further increase in insolvencies worldwide of six percent (previously three percent) in 2025 and another three percent in the coming year. This would be the fifth increase in a row (2022-2026).
Increase in global corporate insolvencies
A similar picture is emerging worldwide: according to the latest developments, insolvencies are rising more strongly than initially expected at six percent (forecast October 2024: three percent). The increase is primarily driven by the expected development in the USA (2025: +eleven percent, 2026: +six percent) and Asia (2025: +five percent, 2026: +six percent).
Upside risk: high interest rates and trade war
The expansion of lending can help to reduce corporate insolvencies: Companies are provided with liquidity to refinance their existing debt, maintain operations and invest in growth, which is otherwise difficult, especially during economic downturns. Although Allianz Trade expects interest rates to fall in both Europe and the USA, inflation-related risks, particularly in the USA, could jeopardize interest rate cuts. Should borrowing costs rise and make access to credit more difficult, this could lead to a slowdown in credit growth, a tightening of financial conditions and an increased risk of default for heavily indebted companies. Allianz Trade estimates suggest that a one percent decline in credit growth over the next three months will lead to an increase in insolvencies of around +three percent in the US, +0.4 percent in Germany, +one percent in the UK and +two percent in France.
Geopolitical risks due to ongoing conflicts
However, according to Allianz Trade, the biggest upside risk to insolvencies is the threat of trade war: “Our insolvency forecast could deteriorate if the European economy performs weaker than expected, momentum slows, resilience in the APAC region is weaker, headwinds from China become stronger and the outlook for the US deteriorates further,” says Maxime Lemerle, Head of Insolvency Research at Allianz Trade. “Geopolitical risks from the ongoing conflicts between Ukraine and Russia and in the Middle East, tensions in the South China Sea and political uncertainty over Taiwan could also trigger further turbulence. A full-blown trade war would increase our insolvency forecast by a further +2.1 percentage points and +4.8 percentage points, meaning that global corporate insolvencies would rise by +7.8% and +8.3% in 2025 and 2026 respectively. For 2025-2026, this would mean +6,800 additional cases in the US and +9,100 in Western Europe.”