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.
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Global business insolvencies are expected to rise sharply over the next two years as the ongoing Middle East conflict ripples through energy markets, supply chains and financial systems, according to the latest report by Allianz Trade.
The insurer forecasts a 6% increase in global insolvencies in 2026, marking a fifth consecutive year of rising corporate failures.
While earlier projections anticipated some easing in 2027, insolvency levels are now expected to stabilise at elevated levels instead, reflecting persistent economic pressures linked to geopolitical instability.
At the heart of the revised outlook is the intensifying conflict in the Middle East, which has introduced significant volatility into oil and gas markets while driving up shipping and logistics costs. These disruptions are feeding into broader inflationary pressures and tightening financial conditions globally, creating a challenging operating environment for businesses.
According to Aylin Somersan Coqui, CEO of Allianz Trade, the direct impact of the crisis will result in an additional 7,000 insolvencies in 2026 and a further 7,900 in 2027 compared to pre-crisis forecasts.
Coqui said this underscores the scale at which geopolitical shocks are now influencing corporate stability across regions and sectors.
“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,” Coqui said.
“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.”
The report highlights how second-round effects are compounding the initial disruptions. Rising energy prices are increasing production and transportation costs across industries, from agriculture and manufacturing to healthcare and technology. At the same time, weaker consumer demand and declining business confidence are squeezing revenues.
Companies with limited pricing power, high debt burdens and thin profit margins are particularly vulnerable. Sectors that are energy-intensive or heavily reliant on global supply chains—such as transportation, chemicals and metals—are facing acute pressure.
The risks could escalate further if the conflict intensifies or persists. A prolonged disruption, particularly involving key trade routes such as the Strait of Hormuz, could significantly constrain global oil and gas supplies.
This would likely trigger additional spikes in commodity prices, including fertilizers and other critical inputs, amplifying inflation and slowing economic growth.
“A sustained and widespread escalation would see global insolvencies increase by +10% in 2026 and +3% in 2027,” added Maxime Lemerle, lead analyst for insolvency research at Allianz Trade.
“This would translate into around 4,100 additional insolvency cases in the US and 10,500 in Western Europe over the 2026–2027 period.”
The human cost of rising corporate failures is also expected to be substantial. Allianz Trade estimates that around 2.2 million jobs could be at risk globally in 2026 as a result of business insolvencies—an increase of 94,000 compared to the previous year.
Europe is projected to be the hardest hit region, accounting for approximately 1.3 million of the jobs at risk.
Within this, Western Europe alone could see around 960,000 positions affected, while North America may face roughly 460,000 job losses. These figures would represent a 12-year high for both regions.
Key sectors expected to see the greatest employment impact include construction, retail and services—industries that are typically more exposed to fluctuations in consumer demand and financing conditions.
Overall, the findings point to a fragile global economic environment in which geopolitical tensions are increasingly shaping financial outcomes. With inflationary pressures lingering and borrowing costs remaining elevated, businesses worldwide face mounting challenges in maintaining solvency.
Within this, Western Europe alone could see around 960,000 positions affected, while North America may face roughly 460,000 job losses. These figures would represent a 12-year high for both regions.
Key sectors expected to see the greatest employment impact include construction, retail and services—industries that are typically more exposed to fluctuations in consumer demand and financing conditions.
Overall, the findings point to a fragile global economic environment in which geopolitical tensions are increasingly shaping financial outcomes. With inflationary pressures lingering and borrowing costs remaining elevated, businesses worldwide face mounting challenges in maintaining solvency.
BUSINESS REPORT