The alarm is sounding: 709 company failures were recorded in France's Overseas Departments and Regions (DROM) in the second quarter of 2026, according to Allianz Trade data. That represents a 30% increase versus Q2 2025 — nearly double the national rate (+5%).
Réunion: epicentre of the crisis
Réunion alone accounts for almost 48% of all overseas failures, with a 36% year-on-year surge. Across the first half of 2026, the trend is even starker: +23% across all overseas territories. Guadeloupe (+46%) and Martinique (+45%) show sharper proportional rises, but Réunion's absolute volumes remain the highest. French Guiana is the exception, posting a 29% decline after an exceptional spike in 2025.
Trade and services hit hardest
By sector, retail trade is the hardest hit: +33% failures in the DROM versus just +3% nationally. Services follow at +28% (vs +8% in metropolitan France). Industry (+23%) and hospitality (+8%) round out the picture, with hospitality holding up better thanks to the tourism season.
A cocktail of structural causes
Allianz Trade points to several compounding factors: sluggish growth on the island (unemployment at 18% in Q1 2026), persistent inflation squeezing household spending, tight financing conditions, and geopolitical uncertainty weighing on business confidence. Import competition from low-cost sources — structurally hard to counter in an island economy — adds further pressure.
At the national level, France recorded 18,004 collective proceedings in Q2 2026, with projections exceeding 70,000 failures for full-year 2026 — a worrying level that the overseas territories are surpassing by a wide margin proportionally.
Why it matters
Each business failure in Réunion means jobs lost in an already stretched labour market. A 30% spike in Q2 2026 will fuel calls from chambers of commerce for targeted support schemes for island economies. Without a structural response, Réunion's SME fabric risks lasting damage — and recovery becomes harder with each passing quarter.
Sources: Allianz Trade via Megazap, Entrepreneur.re, linfo.re — 7 August 2026