Asia to see continued increase in business insolvencies in 2025 and 2026

Asia is expected to see business insolvencies rise in 2025 by 5%, and then 6% in 2026, according to Allianz Trade’s latest Global Insolvency Report. Last year, Singapore saw the highest increase in insolvencies last year of all 44 countries in the report, up 46%. Other large increases in Asia in 2024 occurred in Australia (+41%) and New Zealand (+40%), together with Hong Kong (+25%), South Korea (+17%), Japan (+15%) and China (+3%). The few exceptions to an increase in business insolvencies were India (-23%), and Taiwan (-20%). Global business insolvencies are expected to rise by +6% in 2025 and +3% in 2026, after +10% in 2024 driven by the risk of delayed easing of interest rates, the prolonged uncertain environment and the soft rebound in demand. The credit insurer warned that relatively high interest rates and the looming trade war could drive global business insolvencies even higher in the next two years and push global insolvencies above +7% in 2025 and 2026. Looking ahead, in Asia, 2025 is expected to see business insolvencies rise by 5%, and then 6% in 2026, notably in China, where business insolvencies should keep on increasing from the low levels reached in 2023, and are expected to increase by 10% in 2026, according to the report. “We expect 2025 to bring a moderate downside trend reversal in three countries that hit highs in 2024 – namely Australia (historical high), Singapore (24- year record) and Japan (11-year record),” Allianz Trade says in the report. “Other countries are set to see a more (Taiwan, New Zealand) or less (India, Korea, Hong Kong) significant rise, given weaker external demand and the lagging effects of prolonged high interest rates.” It adds: “In this context, Hong Kong should register its largest number of business insolvencies since 2010 in 2025 (450 cases) and South Korea the largest since 2000 (2,000 cases). At the regional level, this would translate into a +5% y/y increase in 2025 (+1% without China), from +3% in 2024 (+3% without China), followed by +6% in 2026 (-4% without China), with China mechanically playing a key role since it accounts for 61% of our regional index.” The report says Allianz Trade expects China to confirm in 2025-2026 the upside trend reversal that started in 2024, with a +3% rebound to 7,150 cases, still a low level compared to the record levels of 2019-2020 (11,900 cases in average), but close to its pre-pandemic number (7,430 on average for 2017-2018). “Despite the additional fiscal stimulus of RMB 2.9trn announced for 2025, we expect the economic slowdown to support a gradual increase in business insolvencies (+7% and +10% in 2025 and 2026, respectively), pushing them closer to 8,000 cases by 2026. Importantly, 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 the latter will continue to face headwinds from global trade due to China’s position in global supply chains,” the report states. Aylin Somersan Coqui, CEO of Allianz Trade, said: “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.” She added: “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.”

Asia to see continued increase in business insolvencies in 2025 and 2026

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