Economic uncertainty is a major business risk
Source: Asia Insurance Review | Jan 2024
A seemingly unrelenting series of political, social and economic shocks have buffeted international markets and the global economy has been on the brink of recession since the pandemic according to a new article by specialty insurer Beazley on its website.
The spotlight article on business risks of 2023 said businesses are being forced to keep pace with a constantly changing environment or they risk falling behind. It said, “A quarter (25%) of businesses we surveyed rank economic uncertainty as a major risk that they will face in 2024. The ripple effects of interest rate rises by central banks across the globe are hard to predict and businesses feel exposed to many factors which are entirely outside of their control.
“While one in four businesses still view the economic climate with uncertainty, however, this is an improvement on 2022 (29%). Given inflation is still rampant in many regions and merger and acquisitions and initial public offering activity in the leading financial centres is languid at best, despite optimists predicting a more buoyant sector, it would seem a stretch to suggest that firms feel the worst is over. Rather, an increasing degree of turbulence is being built into business modelling and outlooks.”
According to an agency report soaring inflation has plagued the US, decreasing from 9% in June 2022 to 3.2% in October 2023 but still exceeding the Fed’s 2% target. To combat this, the Federal Reserve has raised interest rates 11 times since March 2022, reaching 5.5%. The repercussions include increased borrowing costs for housing, cars, and business investments, sparking concerns about a looming recession. A