Prolonged conflict in the Middle East is reviving the risk of a global inflation shock, with rising energy, commodity and transport costs forcing central banks to maintain restrictive monetary policies, according to trade credit insurer Coface.

The Asia-Pacific region is a bright spot on the international scene, but growth is increasingly uneven, the company’s latest Risk Review says.

Coface chief economist for Asia-Pacific Bernard Aw says AI is driving growth in the region, with Taiwan, South Korea, Malaysia, Vietnam and Singapore benefiting from stronger demand for semiconductors.

China’s recovery remains uneven, with weak property activity and consumer demand.

The report notes private demand in Australia has been resilient this year, “underpinned by healthy household finances and strong data centre investment”. This will compel the Reserve Bank to continue restraining demand.

Tighter financing conditions are adding to business risks, Mr Aw says.

“Rising borrowing costs are putting further pressure on financially vulnerable companies, particularly those already contending with higher operating expenses.”

Insolvencies in North America rose 20% year on year in the first half, and in recent months they have increased in Australia, Japan and Taiwan.