As economic and geopolitical uncertainties are on the rise, business leaders need to anticipate and respond proactively rather than reactively to potential shocks. By analysing alternative macro scenarios, this report highlights the top global risks over 2024-2026 and assesses their potential impacts on real GDP growth. It also ranks the vulnerability of economies to macro shocks, helping businesses to estimate market risks, develop more robust strategies, and better respond to negative shocks.
This report comes in PPT.
As the global economy still faces difficulties in bouncing back from the macro shocks caused by the COVID-19 pandemic and the war in Ukraine, uncertainty continues to mount, as multiple geopolitical, economic and climate risks persist, and widen the range of possible outcomes for global growth.
Amid the high-risk environment, seven downside scenarios could pan out, impacting global and individual countries’ economic growth and inflation: global stagflation, global fragmentation, commodity price hike, US hard landing, China slowdown, Europe downturn and Latin America downturn.
Rising geopolitical risks keep the likelihood of supply-side shocks high, threatening trade disruptions and a surge in commodity prices. Global economic fragmentation and commodity price hike scenarios would affect production, increase costs for businesses and consumers, and significantly reduce global real GDP growth by 1.3-1.7 percentage points over 2024-2026.
Ukraine, Greece, Argentina and Croatia have been affected by war, political instability or recent severe recession, and rank as the highest risk economies in Euromonitor’s Country Risk Index 2024. Meanwhile, the lowest risk economies are Australia, Norway and Sweden, given their strong economic fundamentals and resilience to external supply shocks.
Global macro shocks can affect both advanced and developing markets alike, requiring global businesses to be agile in any market they are operating in. Incorporation of alternative macroeconomic scenarios as part of market research leads to more robust strategy planning, and a better response to negative shocks.
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