Hong Kong and Singapore registered the biggest increases in insolvency cases in Asia this year, as the impact of US tariffs weighed heavily on the two export-oriented economies, a new report reveals.

Bankruptcy filings rose 33% in Hong Kong and 22% in Singapore, Allianz says in its Global Insolvency Outlook report. On the other hand, Taiwan, whose semiconductor exports are currently not covered by US punitive duties, saw a 24% decline in insolvency cases. India, another high-growth economy in Asia, posted a 27% plunge in the number of companies going bust, the biggest drop worldwide.   

Overall, companies appear to be weathering the impact of trade restrictions on their operations, but related risks and uncertainties persist, raising fears that more businesses could go under in the next couple of years, the report warns.

In the first half of 2025, insolvency growth worldwide slowed to 4%, compared to 9% in the same period last year, as companies launched countermeasures, including trade rerouting, lower shipping costs, and price cutting, Allianz says.

Despite the improvement, Allianz’s Global Insolvency Index still rose 5% from last year, marking 12 consecutive quarters of growth. This figure is worrying as it has surpassed the pre-pandemic level by 19%, and half of the surveyed economies are expected to register more failing companies than during the 2008 financial crisis.

In Asia-Pacific, bankruptcy filings have soared almost two-fifths year-to-date, making it the largest regional contributor to the global increase.

Countries like South Korea, New Zealand, Australia, and Japan saw multi-year highs in insolvency cases, with Korea’s 14% rise 1.8x the pre-pandemic average. While China recorded a modest 9% rise in bankruptcy cases, its sizeable economy still contributed significantly to Asia’s insolvency uptrend.

Shrinking buffers

Exporters remain on the back foot due to limitations in their shock-absorbing capacity following multiple rounds of tariffs, as well as other factors such as tight credit supply and weak economic recovery. 

“In several countries, the level of activity is unlikely to reach the minimum that has historically been required to at least stabilize the number of insolvencies,” the report states. “This prolonged lack of economic momentum is likely to sustain competition and limit pricing power and revenue growth, keeping the pressure on profitability, and increasing the risk of insolvency for the most fragile firms.”

Vulnerable sectors such as construction and automotive will see their resilience tested, given their high sensitivity to retail demand, alongside technological disruptions and heightened competition. Small and medium enterprises also face tighter access to funds.

New start-ups, particularly those riding on the artificial intelligence boom, are often highly vulnerable to financial pressures amid price competition. These combined weaknesses not only dent their financial buffers but also increase the sector’s insolvency risks as profitability declines.

Turbulence to wane  

Global insolvency is expected to start declining from 2027, Allianz projects, although Asia is forecast to record a 2% growth that year, skewed by China’s stubborn figure.

Bankruptcy forecasts for Asia still stand well above those for the other regions. However, Australia, New Zealand, Hong Kong, and South Korea will lead the decline in 2026, and Japan, Taiwan, and Singapore will follow suit in the following year.

India is expected to see a growth in bankruptcies next year. China will remain stagnant, with over 8,000 insolvency filings expected in 2026 and 2027.