Allianz Trade warns against the growth of the global business economy

Allianz Trade has updated its forecast for global corporate insolvencies, predicting an 11% increase in 2024, followed by a further increase of 2% in 2025, according to its latest Global Insolvency Report.

The company expects bankruptcy rates to continue to rise through 2026, reflecting the ongoing challenges businesses around the world face amid weak economic demand, geopolitical risks, and various financial conditions.

Why did Allianz Trade revise its forecast for global business payments?

These new estimates show a more difficult outlook than previous forecasts. Allianz Trade had previously forecast growth of 9% in 2024, but recent developments have led to a revision of more than 2%.

The report also revised the expected increase in 2025 from low growth to 2%, with stability expected until 2026.

Global business deficit forecast by region

Default is estimated to vary by region.

In the US, it is expected to increase by 12% by 2025, followed by a 4% decrease the following year. In Germany, the fiscal deficit is forecast to increase by 4% before decreasing by 4% in 2026.

Meanwhile, France and the UK are expected to see an average decline of 6% in 2025, with further declines in 2026. On the contrary, Italy is expected to see a continuous increase, while business failures in China will rise from low levels, with 5 benefits. % and 6% in 2025 and 2026, respectively.

Annual data shows that the global financial deficit has risen by 9%, with growth affecting many regions and sectors.

Allianz Trade's 2024 global insolvency index is expected to be 13% higher than the 2016-2019 average, although still 11% below the peak seen during the Global Financial Crisis.

He noted that the end of support measures introduced during the violence and the energy crisis have left some companies vulnerable, especially in sectors such as construction, retail and services.

“That's why countries accounting for more than half of global GDP will be hit by double-digit increases in 2024, and two-thirds could surpass their pre-pandemic numbers this year,” said Coqui.

Additionally, capital deficits have reached record highs, especially in Western Europe.

This trend poses a major risk to employment, as Allianz Trade reveals that more than 1.6 million jobs could be at risk in Europe and North America by 2025. This represents 8% of the total number of unemployed, with sectors such as construction, retail, and services being the most prominent.

Low interest rates are expected to help businesses

Allianz Trade said lower interest rates could provide relief to businesses by reducing borrowing costs and improving cash flow. However, it warns that price cuts alone are unlikely to be enough to address the financial problems many companies are facing.

Maxime Lemerle, lead insolvency research analyst at Allianz Trade, noted that companies are already adjusting to higher levels.

He explained that although the expected reduction in tax rates – by 2 percent in September 2025 – could reduce the trend of insolvency by about 4 percent, this would slightly reduce the rate of increase in total US insolvency and strengthen the decline in other regions such as France.