Business insolvencies to rise by 5% in 2025: Allianz Trade

Insurers must brace for high interest rates, which could strain heavily leveraged sectors.

For the next two years, global business insolvencies are projected to increase further after a 10% increase in 2024, Allianz Trade warned the insurance industry.

Insolvencies are expected to grow by 6% in 2025 and 3% in 2026, marking five consecutive years of rising insolvency rates from 2022 to 2026.  

The rise in insolvencies is attributed to delayed easing of interest rates, economic uncertainty, and weak demand.

High interest rates may strain heavily leveraged sectors, whilst challenges like the green transition, AI competition, and supply chain disruptions could further pressure companies. 

In the Asia-Pacific (APAC) region, business insolvencies are expected to rise by 5% in 2025 and 6% in 2026. 

In 2024, several markets saw significant increases, including Singapore (46%), Australia (41%), New Zealand (40%), Hong Kong (25%), South Korea (17%), and Japan (15%), with construction, wholesale, and services sectors particularly affected. 

Despite a potential moderate decline in insolvencies in Australia, Singapore, and Japan in 2025, countries like Taiwan (8%), South Korea (3%), and Hong Kong (2%) are likely to see continued growth in insolvency rates due to weak external demand and high interest rates.  

China is also expected to see rising insolvencies, with increases of 7% in 2025 and 10% in 2026, despite the government’s additional fiscal stimulus of RMB2.9t. 

The construction sector is projected to remain weak, whilst export-oriented firms could face challenges amidst global trade headwinds. 
Overall, insolvencies in APAC are estimated to rise by 5% in 2025 (1% excluding China) and 6% in 2026 (−4% without China).