Allianz: The number of global corporate bankruptcies is expected to increase by 11% this year, higher than the forecast of more than 400 cases in Hong Kong

The Zhitong Finance App learned that Allianz Trading pointed out in its latest “Global Bankruptcy Report” that the global business environment will face more severe prospects. The number of corporate bankruptcies is expected to increase by 11% in 2024, which is higher than previously anticipated. Meanwhile, Hong Kong will face the highest number of corporate bankruptcies since 2010 this year.

According to the report, most Asian economies will experience higher than expected bankruptcy growth this year, particularly Singapore (+39%), New Zealand (+32%), and South Korea (+19%); India and Taiwan are exceptions, provided that China can achieve a moderate upward trend starting in mid-2024. As China accounts for 61% of the regional index, its overall performance plays a key role in the region.

According to the report, the number of bankruptcies in the Asia-Pacific region is expected to increase by 3% year-on-year this year, followed by 1% in 2025. China is expected to maintain a low number of bankruptcies at the end of this year, less than 6,600, which is 45% lower than the record high of 2019-2020. However, although the People's Bank of China launched a gift package at the end of September, it is expected that the economic slowdown and weak potential growth will gradually lead to a rebound in corporate bankruptcy, increasing by 5% and 6% in 2025 and 2026, respectively, to pre-pandemic levels.

Meanwhile, Hong Kong will face the highest number of corporate bankruptcies since 2010 this year, with more than 400 cases. This indicates that although the economic cycle is more favorable, certain challenges may still lead to an increase in the number of corporate bankruptcies. After 4 years of increase, the number of bankruptcies in 2025 and 2026 is expected to remain above the 2010-2020 average (380 and 370, respectively), and the tailwind effect brought about by the rebound in global trade will make up for the negative impact of the slowdown in domestic demand.

According to the global bankruptcy forecast first released by Allianz Trading in February this year, the number of corporate bankruptcies is expected to increase sharply by 9% this year, then stabilize in 2025. However, recent developments have made the situation more serious. The number of bankruptcies is expected to rise to 11% this year, then rise another 2% and peak in 2025. The trend of corporate bankruptcy is not expected to stabilize until 2026. Even so, the number of bankruptcies will remain high.

Allianz Trading predicts that the number of bankruptcies in the US will increase by 12% in 2025, followed by a 4% decline in 2026. The number of bankruptcies in Germany will increase by 4% and then fall by 4% in 2026. The number of bankruptcies in France and the UK will decline moderately from very high levels, falling 6% in 2025, and 3% and 4%, respectively, in 2026. Meanwhile, the number of bankruptcies in Italy will continue to rise, rising by 4% and 3% this year and next, respectively.

Allianz Trade CEO AylinSomersancoqui said that the rollercoaster fluctuation in the number of bankruptcies of global companies is partly due to still sluggish global demand, continued geopolitical uncertainty, and uneven financing conditions. This can also be attributed to a backlog of bankruptcies, as businesses are no longer protected by support measures implemented during the pandemic and energy crisis. That's why countries accounting for more than half of global GDP will face double-digit increases in bankruptcies in 2024, and two-thirds of countries are likely to surpass pre-pandemic bankruptcy levels this year. The construction, retail, and service industries have been hit the hardest in terms of frequency and severity.