Allianz Trade Country Risk Atlas 2025

Allianz Trade today releases its second Country 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.

“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, ends: “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.”