Global insolvency events are accelerating
In the global insolvency forecast from February 2024, Allianz Trade already expected a sharp increase in 2024 (+9%) and a subsequent stabilization in 2025 (+0%). With recent developments, the global picture is even bleaker, with a forecast increase of 11% (+2 percentage points) this year, followed by a peak in 2025 with a further increase of 2% (+2 percentage points). Corporate insolvencies are not expected to stabilize at a high level until 2026.
The main drivers of the expected global increase in 2025 are the USA with +12% after already 31% in 2024. But also Russia (+16%) as well as China (+5%) and Taiwan (7%) in Asia and Germany (+4% ) and Italy (+4%) in Europe contribute to the global increase. In France and Great Britain, insolvencies are already at very high levels after sharp increases in previous years and will weaken slightly in 2025 (-6% in each case).
Since the beginning of the year, global corporate insolvencies have already increased by 9%. The increase is broad across regions and sectors. Globally, the Allianz Trade Insolvency Index at the end of 2024 is expected to be 13% above the average of the pre-pandemic years (2016-2019), but 11% below the level of the global financial crisis.
“This global corporate insolvency roller coaster is driven in part by continued subdued global demand, ongoing geopolitical uncertainty and uneven financing conditions,” said Aylin Somersan Coqui, CEO of Allianz Trade Group. “But it can also be explained by the ‘backlog’ of bankruptcies, as companies are no longer protected by the support measures introduced during the pandemic and the energy crisis. Therefore, countries representing more than half of global GDP will experience a double-digit increase in bankruptcies in 2024. Two-thirds are expected to exceed the number of bankruptcies this year before the pandemic. The construction, retail and service industries are the hardest hit, both in terms of frequency and severity of bankruptcies.”