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Concerned about the Global Economic Environment? Read this Global Business Risk Report by Dun & Bradstreet

10 October 2019

Dun & Bradstreet have released their Global Business Risk Report (GBRR) for Q3 2019. What is the GBRR? D&B team of analysts and economists form a view of the top ten risks facing businesses. Uniquely D&B look at these risks as emanating from particular regions, assessing each of the risks on two axes: first, the likelihood of it happening and second the global impact on the business environment. These two scores are then used to assess the Global Business Impact (GBI) for that event.

The ten GBIs are then summed to provide the quarterly GBI total. Concerningly for those concerned about the global economic environment, the GBI is currently at its second highest level ever; i.e. the global business environment is at its second most challenging level since D&B started the report over five years ago!

So what are the top risks in the latest GBBR? Two emanate from the EU, while one is related to China. There is a link to the report at the end of this article so you can study at your leisure.

Unsurprisingly the potential for trade wars are at the top of D&B’s concerns. The spat between the US and China could spiral out of control. Already global trade volumes are being hit; with the impact not just between China and the US but secondary effects are causing trade volumes within the likes of Asia-Pacific.

Secondly, a worry is that US growth has peaked, leading to a downturn in business activity. Given the country’s global importance this downturn will hit global growth through transmission channels such as imports into the US and investment flows.

A key takeaway for businesses operating in today’s globalised world, two regions are proving to be important. Half of the top ten risks are associated with West and Central Europe; the highest ever-concentration of risks from one region in the GBRR. This shows the need for decision-makers in companies to be closely aware what is happening in the EU.

Next, the second important takeaway is the growing importance of growth or rather the slowdown of growth in China. Remember it was growth in the emerging economies like China that dragged us out of the 2008-09 recession. The Chinese economy is being hit by both the trade war with the US and its ability to maintain the currency at a level that will not trigger a crisis in its debt-laden financial sector.

Third, business decision-makers should not just be concerned with what is happening in the global economy but looking at the political events including trade wars, Brexit, and tensions in the Persian Gulf which are adding a further layer of concern for entrepreneurs.

Relatedly, the report highlights the importance of policy-makers in attempting to reduce on-going uncertainties. Policy-makers are treading Occam’s razor in terms of the outlook for the economically-vital EU and China.

This highlights how uncertain times are for businesses at present. We have a webinar presentation of the report on our website. Click here to see it.

Read the full report here: https://www.dnb.co.uk/perspectives/finance-credit-risk/quarterly-global-business-risk-report.html

 


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