Despite ongoing geopolitical turmoil—and even trade wars—country risk levels, including regulatory and business environment risks, are currently lower than before the pandemic. Quarter-on-quarter, sector assessments have also improved slightly, but the details paint a more complex picture: there are still 40% fewer sectors rated as low-risk compared to 2019, and several key industries—such as pharmaceuticals and shipbuilding—are experiencing significant disruptions in major markets.
Gradual Improvement in Country Risk Assessments
For exporters, there is some good news. Country risk ratings improved slightly in the last quarter, with four emerging markets—Armenia, Ecuador, Montenegro, and Uzbekistan—receiving upgrades thanks to stronger GDP growth, greater political stability, and healthier fiscal positions.
According to Allianz Trade, 56% of global country risk assessments now fall into the “low” or “medium” categories—an increase of five percentage points compared to pre-pandemic levels. This reflects improved business environments across many economies despite persistent uncertainty in global trade.
Sector Risk: Slight Quarter-on-Quarter Progress
Sector risk assessments have also improved marginally in net terms for the first time since early 2024, reflecting cautious optimism despite weak demand, high financing costs, and trade tensions. However, challenges remain unevenly distributed across sectors and regions.
Nine upgrades and eight downgrades were recorded in the third quarter of 2025. Upgrades occurred mainly in Latin America (5) and Asia (3), often shifting sectors from “sensitive” to “medium” risk. These included construction in Malaysia and Uruguay, machinery in Chile, transportation in South Korea, and metals and household appliances in Uruguay. The agri-food sector in Spain and transport equipment in Japan were raised to the “low” risk category.
Trouble for the Pharmaceutical and Chemical Sectors
The pharmaceutical industry saw its risk rating downgraded in the United States and India from “low” to “medium”. This was driven by the introduction of a 100% import tariff on branded drugs entering the U.S. from October 1, alongside a presidential executive order mandating voluntary price reductions. The changes are expected to impact not only U.S. and Indian companies but also the European pharmaceutical industry, given that around 45% of European pharma revenues come from the U.S. market.
While generic drugs (about 90% of prescriptions) were exempted, branded medicines—representing the bulk of U.S. drug spending—will face significant headwinds. However, exemptions are available for companies investing in U.S. manufacturing or agreeing to reduce prices. Notably, Pfizer secured a three-year tariff exemption by committing to sell medicines to Medicaid patients via the TrumpRx platform at reduced prices and investing USD 70 billion domestically.
The chemical sector also saw downgrades, with the United Kingdom and Uruguay joining the list of 15 countries where the industry is rated “sensitive.” Demand for basic chemicals remains weak. Additional downgrades include metals in Canada, retail in Switzerland, and automotive in France, all moving from “medium” to “sensitive” risk.
The global automotive sector remains under strain. The downturn has triggered a wave of insolvencies—particularly among parts suppliers, dealerships, and repair shops—which are vulnerable to weak demand and the costly transition toward electrification.
Regional Risk Disparities
Globally, 54% of sectors are now rated as either “low” or “medium” risk, showing overall stability. However, when analyzed by category, 45% of sectors are rated “medium risk” and 43% “sensitive”, both unchanged from the previous quarter. Asia remains the most stable region, while Latin America—and to a lesser extent Central and Eastern Europe—shows the highest sectoral risk exposure.
Before the pandemic, 15% of sectors were rated as “low risk”; today that figure stands at only 9%.
Emerging Markets Drive Upgrades
Allianz Trade highlighted four emerging markets—Armenia, Ecuador, Montenegro, and Uzbekistan—as showing notable resilience in Q3 2025. Their ratings were lifted thanks to stronger domestic demand, sound fiscal discipline, and stable political environments.
Ecuador, for instance, benefited from hydropower normalization, agricultural expansion, and improved trade diversification with Asia and Europe. It also strengthened its foreign reserves, achieved a more predictable policy environment, and gradually reduced its reliance on oil exports. Uzbekistan’s growth remains robust, supported by favorable demographics, high gold prices, and remittance inflows from Russia, which now account for about 10% of GDP.
Outlook for 2026: Uneven Recovery
Looking ahead, Allianz Trade expects moderate improvement in the global risk landscape through 2026—but with persistent divergence between developed and emerging markets.
While many emerging economies will likely benefit from domestic demand recovery driven by easier monetary policy and fiscal support, developed economies face slower growth and rising fiscal pressure due to high public debt and election-related spending.
Geopolitical risks and the ongoing trade war—which has led to U.S. tariff hikes, retaliatory measures, and supply chain realignments—will continue to shape credit risk profiles. Asia is expected to remain the most stable region, while Africa, Latin America, and parts of Europe will experience more volatility.
Shipping and Shipbuilding: A New Front in the Trade War
In October 2025, the U.S. began imposing fees on Chinese-built or Chinese-operated ships, with lower tariffs on all other foreign-built vessels. The goal is to counter China’s 55% market share in global maritime transport and to revive the U.S. shipbuilding industry.
The fees—ranging from USD 14 to USD 50 per net ton per voyage—will rise further by 2028. This development benefits South Korean and Japanese shipyards (holding a combined 41% global market share), provided they can absorb the increased demand. China, however, has already announced retaliatory measures.
During the first half of 2025, China’s share of new shipbuilding contracts fell from 72% to 52%, while South Korea gained 13 percentage points. For shipping lines, the new U.S. fees represent an additional cost of USD 3–8 million per voyage for Chinese carriers and USD 1.2–2.5 million for others. Some operators have pledged to absorb these costs rather than pass them on to consumers.
Source: ceo.com.pl – Allianz Trade sees improvement in global risk outlook, but not across all sectors
