Global business insolvencies are set to rise by 6% this year, on the back of a 6% rise in 2025, which would result in the fifth consecutive year of growing insolvencies, before plateauing at a high level in 2027, says trade credit insurance company Allianz Trade.

However, a prolonged conflict in the Middle East would amplify insolvency risks.

If the Strait of Hormuz remains blocked for longer, second-round effects could be amplified, with a sustained disruption of global oil and gas supply, as well as other commodity supply shortages, such as fertilisers and helium.

This, combined with rising inflation, a drop in confidence and lower growth, would push up insolvency risks.

“A sustained and widespread escalation would see global insolvencies increase by 10% in 2026 and by 3% in 2027. This would translate into around 4 100 additional insolvency cases in the US and 10 500 in Western Europe over the 2026/27 period,” says Allianz Trade insolvency research lead analyst Maxime Lemerle.

Globally, the number of jobs at risk could increase this year owing to business insolvencies. With a 6% rise in global business insolvencies projected for this year, Allianz Trade estimates that 2.2-million jobs would be directly at risk, which would be a 94 000 increase compared with 2025.

“Construction, retail and services would be the main sectors at risk. Europe, with 1.3-million people potentially affected, leads the global count. [This is followed by] Western Europe, with about 960 000, and North America, with about 460 000, which are both at a 12-year high.

“Overall, jobs at risk due to business insolvencies would represent 6% of the total number of unemployed people in the US and Europe,” Lemerle says.

The Middle East crisis has amplified volatility and uncertainty across energy markets, shipping costs and global supply chains. Beyond the immediate disruption, second round effects point to accelerating inflation, tighter financial conditions, and a deterioration in business confidence, the company says.

“This situation is driving up costs across global value chains, from agrifood to manufacturing, healthcare and technology. It also exacerbates pressures on energy-intensive sectors such as transportation, chemicals and metals.

“The combination of weaker demand, rising input costs and tighter financial conditions is straining companies with weak pricing power, thin margins, high debt levels or structurally higher working capital requirements.

“Compared to our pre-crisis forecast, the direct toll of the Middle East conflict will be an additional 7 000 global business insolvencies for 2026 and 7 900 for 2027,” explains Allianz Trade CEO Aylin Somersan Coqui.

SOUTH AFRICA
Meanwhile, in South Africa, Allianz Trade expects the continuous decrease in business insolvencies that has been the trend since 2020 to keep on softening and lead to a plateau this year.

Business insolvencies in the country decreased by 1% in 2025, which is lower than the 6% decrease recorded in 2024 and the 13% decline in 2023.

Business insolvencies reached 1 534 cases last year – a new low level in a historical perspective, as it is 18% below the past ten-year average and 40% below the past 20-year average.

The current environment is, however, likely to reshape the insolvency outlook as the crisis in the Middle East is reversing the tailwinds, notably interest rate cuts, lower fuel prices, improved business sentiment and greater economic momentum, that were in place the past few years.

Allianz Trade expects business insolvencies in South Africa to reach 1 540 cases this year and 1 590 cases in 2027.

“While South Africa has benefited from a multi‑year decline in business insolvencies, the environment is clearly becoming more fragile. Global geopolitical tensions, particularly in the Middle East, are reversing some of the tailwinds that supported local businesses in recent years.

“As cost pressures rise and financial conditions tighten, South African companies will need to reassess their risk exposure and place greater focus on cash flow resilience and credit risk management,” explains Allianz Trade South Africa country manager Luke Morawitz.