Executive Summary
This year’s edition of our flagship country risk report provides an overview of the risks to businesses from the domestic and international environment in 2025. The Country Risk Atlas provides comprehensive insights on the economic, political and business framework, as well as sustainability factors, that influence non-payment risk for companies in 83 economies. Our analysis is based on a proprietary risk ratings model updated quarterly with the latest economic developments and Allianz Trade’s unique data on global insolvencies and the business environment. The Country Risk Atlas is designed to help businesses and investors make informed decisions, highlighting potential risks and opportunities around the world.
Country risk improvements have been registered in countries representing 17% of global GDP. In 2024, Allianz Trade upgraded 48 country risk ratings (+27 vs 2023) and downgraded only five (+1 vs 2023). The upgrades reflect a partial recovery in economic growth and financing conditions across regions. Upgrades were distributed mostly across emerging markets: Latin America has seen the most (13), followed by Emerging Europe (10) and Asia-Pacific (nine). However, only 17 upgrades pertain to the long-term aspect of our rating, emphasizing that these improvements are largely cyclical. 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.
Downside risks remain high in 2025-26. While the global economic outlook has improved, thanks to decelerating inflation, recovering credit flows and improved liquidity conditions, many emerging countries still present less conducive business conditions, while developed markets are facing prolonged political uncertainty and upcoming fiscal consolidation. In addition, the looming global trade war is increasing recession risks, which coupled with the return of inflationary pressures would likely undermine confidence, keeping corporates in a prolonged ‘wait and see’ mode. Looking at our country risk sub-ratings, the economic recovery from pre-pandemic conditions has been evident particularly for indicators related to macroeconomic conditions. These have improved at the global level mostly thanks to improvements in 2024 on the back of decelerating inflation, recovering credit flows and improved liquidity conditions, and the global average stands above pre-pandemic levels, at 3 out of 6, equivalent to a BB rating.However, the global average of the structural business environment (SBE) is worse compared to pre-pandemic levels, equivalent to a rating of B. In 2024, 18 countries saw a deterioration in their SBE score, including Saudi Arabia, Taiwan, Japan, Romania and Chile. In terms of commercial risk, we remain well below pre-pandemic levels despite last year’s partial improvements, mainly driven by the normalization in business insolvencies. The global average of commercial risk scores stood below 2 (Medium) pre-pandemic, while they are closer to Sensitive risk currently. Indeed, business insolvencies are above their pre-pandemic number (compared to the 2016-2019 average) in two out of three countries, up from half in 2023. Interestingly, large firms have not been immune to rising business insolvencies. With more than one bankruptcy a day, 2024 is set to be a record-high year for insolvencies of companies with over EUR50mn in turnover. In 2025, we expect our Global Insolvency Index to reach a stable level after three consecutive years on the rise. However, insolvencies will continue to increase in countries accounting for 50% of global GDP, including the US, Germany, Italy, Spain and China.