Allianz Trade upgraded 48 country risk ratings in 2024, more than double compared to 2023
- In 2024, Allianz Trade upgraded 48 country risk ratings (+27 vs 2023) and downgraded only 5 (+1 vs 2023)
- But the positive trend could easily be reversed in 2025-2026, with geoeconomic fractures weighing on business confidence and trade
- Hong Kong, Vietnam, Malaysia and Thailand among key APAC markets that saw upgrades
Allianz Trade today releases its secondCountry Risk Atlas, a flagship publication focused on country risk, an expertise the world leader in trade credit insurance has built up over decades. The Country Risk Atlas is based on a proprietary risk ratings model that is updated every quarter with the latest economic developments and Allianz Trade’s proprietary data. It provides comprehensive analysis and insights into economic, political, business environment and sustainability factors that influence trends in non-payment risk for companies at a macroeconomic level.
Country risk has significantly improved, but challenges loom ahead
In 2024, global country risk showed significant improvement, with 48 economies upgraded and only 5 downgraded. The positive trend witnessed in 2023 is now even more pronounced, with upgrades more than doubling (+27) and downgrades remaining stable (+1).
“The economies that have seen their ratings upgraded represent around 17% of global GDP. Upgrades were distributed mostly across emerging markets: Latin America has seen the most (13), followed by Emerging Europe (10) and Asia Pacific (9). Meanwhile, most of the downgrades were seen in the Middle East region, including Bahrain, Israel and Kuwait, the result of prolonged supply-chain tensions and crude oil prices below the fiscal breakeven,” says Luca Moneta, Senior Economist for Emerging Markets at Allianz Trade.
However, country risk remains highly exposed to the geopolitical and financing tensions expected in the coming months. These could be exacerbated by the further materialization of downside risks.
Asia Pacific: Hong Kong, Vietnam, Malaysia and Thailand among key economies upgraded
Hong Kong has been a solid economic performer in previous decades before entering a volatile growth period between 2019 and 2023. A recovery in global trade supported the Hong Kong economy in 2024, with weakening exports partly offset by improving private consumption and investment spendings. We expect growth to settle at +2.4% in 2025 and +2.2% in 2026.
Meanwhile, Vietnam has been a good performer among emerging economies, with around +7% growth on average in the three decades before the Covid-19 pandemic, and +4.5% on average over 2020-2022. A recovery in global trade, especially in consumer electronics, supported Vietnam’s manufacturing sector in 2024. Outperforming exports, especially electronics, machinery and footwear, will remain key growth drivers supported by the trend of international firms diversifying their supply chains and relocating their operations to Vietnam. As such, Vietnam will remain one of the fastest-growing economies in the Asia Pacific region with robust growth expected at +6.6% in 2025 and +6.4% in 2026, matched by India’s growth of +6.4% per annum over the same period.
“While the global economic outlook has improved, thanks to decelerating inflation, recovering credit flows and improved liquidity conditions, many low-income countries still present less conducive business conditions, while high-income economies are facing prolonged political uncertainty. Additionally, we must keep in mind that two-thirds of the country risk upgrades we made last year are based on short-term indicators, indicating that these improvements are cyclical and potentially reversible. Against this backdrop, businesses should be vigilant in their growth strategies in the context of geopolitical tensions and the rising tide of protectionism. Supply chains are likely to become even more complex, making it all the more important to monitor country risk”, states Aylin Somersan Coqui, CEO of Allianz Trade.
The fragility of recovery: what lies ahead for corporates?
Indeed, according to Allianz Trade, several factors could disrupt the positive momentum in 2025-2026. These elements include:
- Geopolitical tensions: social, political, and institutional conflicts intensified in late 2024
- Trade war risks: rising protectionism and the potential for full-blown trade conflicts
- Civil unrest and polarization: increasing polarization in advanced and emerging markets
Ana Boata, Head of Economic Research at Allianz Trade, concludes: “A full-blown trade war is a major concern: the resulting loss of economic activity and the return of inflationary pressures would likely undermine investor confidence, keeping them in a prolonged ‘wait and see’ mode. At the same time, increasing polarization, already evident in many countries, imposes significant economic costs while intensifying social divisions. The frequency and severity of civil unrest are also rising, driven by factors such as inflation, fiscal adjustments and lagging productivity growth. Against this backdrop, policymakers need to bridge the widening trust deficit and mitigate polarization risks.”
