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Our economists predict a 3% increase in global insolvencies this year, with the uptick driven by the collisions of adverse economic conditions.
The first quarter of 2026 has presented challenging economic conditions for businesses throughout the world. There are the debts accrued during the Covid period which, for some markets, are stickily persistent, rising costs in materials and energy, and ongoing trade tensions.
The 3% rise represents an upward revision on our previous Insolvency Outlook (October 2025), when the overall global trends pointed to a lowering of insolvency levels. This is largely because of the current crisis in the Middle East and the pressure this has added to energy prices. For many businesses already struggling, the increased energy costs are unsurvivable.
Middle East conflict creates uncertainty
These predictions are drawn from the baseline scenario created by our team of economists comprising Iulian Ciobîcă, Ona Čiočytė and myself. In this scenario we make the assumption that the Strait of Hormuz remains closed to shipping for two months, after which it gradually normalises.
However, it is important to add a note of caution. The volatility of the situation inevitably makes predictions tricky. If the crisis in the Middle East drags on for longer, the economic outlook and our insolvency projections are likely to need further negative revision.
Switzerland, Italy and Portugal face insolvency increases
In our April 2026 Insolvency Forecast we dig a little deeper into the major global trading regions. For Europe, insolvency rates are varied, with some markets facing an increase in business failures while others are experiencing improvements.
We expect the highest increases to occur in Switzerland, Italy and Portugal, while the most significant decreases are likely to occur in Ireland, Denmark and Norway. Switzerland, in particular, is facing abnormally high rates of insolvency – as much as a 17% increase – although this is linked to changes in bankruptcy legislation in the country.
New Zealand and Hong Kong enjoy a drop in insolvencies
New Zealand and Hong King are facing a significant reduction in the number of insolvencies, suggesting a return to normal after the high levels seen last year. Australia, Japan and South Korea, however, are showing no clear signs of normalisation, with insolvency rates likely to stay high in the near-term at least.
Insolvency levels remain elevated in North America
US insolvencies are expected to rise by 8% during 2026 and remain unchanged during 2027, with many companies struggling with international trade amid the current tariffs and trade policy uncertainty.
In contrast, we anticipate a reduction in Canadian insolvency levels over the coming months. This is largely because the country experienced a spike in bankruptcies in 2024, following the end of Covid-era support, and levels are settling into the new normal following that.
Are we seeing a return to pandemic-levels of insolvencies?
Without question, businesses are facing an increase in adverse global economic conditions and the business environment is likely to be challenging through 2026. Weaker and vulnerable businesses are more likely to fail. However, the countries facing abnormally high insolvency rates this year are likely to see those levels reduce in 2027.
While current indications point to improvements in 2027 uncertainties do remain, largely concerning the length and depth of the conflict in the Middle East and further tariff policy changes.