Corporate insolvencies across Asia-Pacific are forecast to fall by 5% in 2027, but the improvement may not mean less financial risk for businesses and their trading partners.
Trade credit insurer Atradius expects the decline to be driven largely by financially vulnerable companies leaving the market rather than by a substantial recovery in business conditions. Surviving firms will continue to face high borrowing costs, expensive energy and tighter financing, keeping concerns over payment defaults and counterparty creditworthiness alive.
In its October 2026 Insolvency Outlook, Atradius forecasts a 5% rise in global insolvencies this year, followed by a 4% fall in 2027. The 2026 projection is two percentage points higher than its April estimate, reflecting more persistent financial pressure than it had expected.
“The business environment remains challenging as high input costs and trade tensions persist. Insolvencies are still expected to rise in 2026, based on realised data and our expectations for the remainder of the year. While we expect conditions to begin easing in 2027, this marks the start of a process rather than a full return to normal,” said Theo Smid, senior economist at Atradius.
Australia and South Korea are expected to account for much of Asia-Pacific’s projected improvement, although both face continued strain.
In Australia, high interest rates and weak business confidence are expected to keep insolvencies elevated through the first half of 2027. Atradius expects a decline later in the year as weaker companies exit, even without a significant improvement in economic conditions.
South Korean small and medium-sized enterprises are still carrying pandemic-era debt, and higher interest rates have raised the cost of servicing it. Rising loan delinquency and falling retail sales point to financial stress beyond the companies already entering insolvency proceedings.
Elsewhere, New Zealand is forecast to record a substantial fall in insolvencies, while business failures in Japan are expected to stay elevated as further interest rate rises weigh on corporate finances.
Singapore is expected to buck the regional trend. Insolvencies fell sharply in early 2026 amid relatively strong economic activity and AI-related trade, but Atradius expects them to rise again in 2027, noting that the earlier fall was only partly supported by underlying conditions.
Atradius expects insolvencies to begin normalising in the second half of 2027 as companies adjust their financing, pricing and operating costs. But fewer insolvencies would not necessarily mean stronger balance sheets or fewer late payments.
Not every forecaster agrees on the direction. Allianz Trade’s 2026 insolvency forecast projects a 6% rise in global business failures this year, followed by broadly stable levels in 2027, compared with Atradius’s forecast 4% fall. The forecasts rest on different assumptions and methods, but both point to continued pressure from financing costs, inflation and geopolitical uncertainty.
Energy prices remain a further concern. Atradius expects Brent crude to stay above US$100 a barrel for the rest of 2026, amid disruption to shipping through the Strait of Hormuz and the Red Sea, before falling to just below US$90 by the end of 2027.
For brokers placing trade credit cover, the outlook suggests caution rather than relief. If the expected fall in insolvencies reflects weak firms leaving the market, credit insurers are likely to remain selective about buyers in stressed sectors and markets, and quick to adjust limits where payment behaviour deteriorates.
Markets where Atradius expects pressure to persist, such as Japan and Singapore in 2027, and Australia and South Korea in the first half of the year, are where clients’ buyer limits are most likely to come under review. For clients selling on credit across the region, renewal is an opportunity to check that limits on key buyers still match their trading needs.
