Economic uncertainty is changing risk dynamic as businesses fear for the future

The hangover from the World Economic Forum’s annual meeting in Davos has continued this week with any green shoots for an economic recovery seemingly unlikely to bear fruit any time soon.

United Nations economists have warned that intersecting crises are likely to add further damage to the global economy, with growth set to slow from three per cent in 2022 to 1.9 per cent this year. If their predictions are right the performance will only just eclipse that of the 2007-8 financial crisis and the height of the COVID-19 pandemic.

“In most countries we expect that private consumption and investment will weaken due to inflation and higher interest rates”, said Ingo Pitterle, senior economist at the UN Department of Economic and Social Affairs (UNDESA). “Several countries will see a mild recession before growth is forecast to pick up in the second half of this year and into 2024”.

The UN said it dire predictions come amid the backdrop of the pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency.

In the near term, the economic outlook is gloomy and uncertain with global growth forecast to moderately pick up to 2.7 per cent in 2024.

However, this is highly dependent on the pace and sequence of further monetary tightening – rising interest rates – the consequences of the war in Ukraine, and the possibility of further supply-chain disruptions.

It also prompted a call from UN secretary general António Guterres for the world to hold its nerve on sustainable growth.

“This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs farther out of reach. These unprecedented times demand unprecedented action.

“This action includes a transformative SDG stimulus package, generated through the collective and concerted efforts of all stakeholders.”

The changing geopolitical map has also looked to shorten supplies changes with the emerging economies of Asia under threat from the looming trade war between the US and China.

The UN has called for greater economic co-operation but the growing rift between China and the western economies led by the US and calls for the economy not to be weaponised have only intensified the concerns for many markets.

As emerging markets face emerging risks, as a news platform we are busy making our own plants to plant the emerging risks flag into key markets n the MENA and Asia to mirror the growing interest in the regions and their rising from are rapidly increasing readership.

The risks faced by the world’s businesses and those who are tasked with managing and mitigating those risks, are not only evolving but also at an increasing pace.

At a time when businesses are requiring certainty on which to base their current and future strategies, that certainty is in extremely short supply with little home of a restock any time soon.

Jon Guy, 

Editor, Emerging Risks