Business insolvencies in South Africa are projected to reach up to 1,540 cases in 2026, and while this is a decline from the start of the decade, risks from the Iran War are extensive..
The is contained in the latest Insolvency Report by Allianz Trade, underscores growing vulnerabilities in both domestic and global markets, driven largely by the ripple effects of the escalating conflict involving Iran.
According to the report, global business insolvencies are expected to rise by 6 per cent in 2026, marking a fifth consecutive year of increases. While a plateau is anticipated in 2027, analysts warn that a prolonged conflict could further intensify financial distress among companies worldwide.
The crisis in the Middle East, triggered by military exchanges involving the United States and Israel and subsequent disruptions to regional energy infrastructure, has unsettled global markets. In South Africa, this has translated into higher fuel prices, pressure on the rand, and a shift towards risk-averse investor sentiment.
Although diplomatic engagements between Washington and Tehran have continued in recent weeks, uncertainty persists, particularly around the strategic Strait of Hormuz, a critical artery for global oil shipments.
Allianz Trade noted that the conflict has heightened volatility across energy markets, increased shipping costs, and strained global supply chains. Beyond the immediate disruptions, second-order effects are expected to manifest in the form of rising inflation, tighter financial conditions, and weakening business confidence.
Chief Executive Officer of Allianz Trade, Aylin Somersan Coqui, said the evolving situation is pushing up costs across global value chains, from agriculture and manufacturing to healthcare and technology. She warned that companies with limited pricing power, thin margins, or high debt exposure are particularly vulnerable under current conditions.
Further risks loom if disruptions persist along key energy routes. Analysts caution that a sustained blockade of the Strait of Hormuz could significantly disrupt the supply of oil, gas and other commodities, including fertilisers and helium, thereby amplifying cost pressures across industries.
Lead Analyst for insolvency research at Allianz Trade, Maxime Lemerle, said a broader escalation could push global insolvencies up by as much as 10 per cent in 2026, followed by a further 3 per cent increase in 2027.
Despite the global headwinds, South Africa has, until recently, outperformed many peers, recording a sustained decline in insolvencies. The country saw a marginal 1 per cent drop in 2025, following sharper declines of 6 per cent in 2024 and 13 per cent in 2023. Insolvency cases stood at 1,534 in 2025, significantly below both the 10-year and 20-year historical averages.
However, Allianz Trade warns that the supportive conditions underpinning this trend — including lower interest rates, reduced fuel costs and improved business sentiment — are beginning to erode under the weight of geopolitical instability.
Looking ahead, insolvency cases are expected to rise slightly to 1,590 in 2027, reflecting a more fragile operating environment.
Country Manager for Allianz Trade South Africa, Luke Morawitz, said that while the country has benefited from a multi-year easing in business failures, emerging global pressures are reversing recent gains. He added that companies would need to strengthen cash-flow resilience and adopt more robust credit risk management strategies as financial conditions tighten.
