Businesses are increasingly concerned over geopolitical and economic risks to the global economy, according to Oxford Economics’ latest Global Risk Survey released on November 6.

“Amid the ongoing Gaza conflict, and in line with early evidence  following the Hamas attack on Israel, geopolitical risks are seen as the key threat,” Oxford Economics said in a note.

But concerns extend well beyond Israel and Gaza. Almost two-fifths of respondents view developments in the Middle East as a very significant risk to the global economy over the next two years but worries over China-Taiwan relations are similarly widespread.

And investors are not only scared by tense geopolitics. The polycrisis continues to simmer in the background. Business leaders are also concerned by high inflation and those worries have increased in the last quarter, according to Oxford Economics.

“Respondents anticipate higher inflation next year and are increasingly concerned that sticky inflation will keep policy rates higher for longer,” Oxford Economics said.

Pointedly, the survey did not cover risks due to the accelerating climate crisis after the world recorded its highest temperatures ever in 2023 and the rate of global warming accelerates. Nearly all the environmental indicators are flashing red and this year was marked by unprecedented flooding, fires and other extreme weather events that are likely to repeat or get worse in 2024.

The survey was completed by 130 businesses from 11-27 October.

“Our fourth quarter 2023 Global Risk Survey was launched just days after the start of the Israel-Hamas war. The final results broadly confirm the early evidence from the first wave of the survey, which highlighted a notable decline in business expectations for global growth,” Oxford Economics said.

The survey was dominated by wide-ranging geopolitical concerns as geopolitical tensions were inflamed by the appearance of new conflicts.

“Almost two-fifths of businesses view developments in the Middle East as a very significant risk to the global economy over the next two years, with a similar proportion citing risks relating to China-Taiwan tensions. Overall, geopolitical tensions are the top business concern in the survey, both in the near term and over the medium term,” said Oxford Economics.

Oxford Economics Global Risk Surveys canvas the views of Oxford Economics’ clients, including some of the world’s largest companies. Based on past analysis of survey responses, the participating companies collectively employ around 6mn people and have a total turnover of around $2 trillion.

1123 GBL Businesses' geopolitical concerns  OXFORD ECONOMICS 

Oxford Economics’ Global Business Sentiment Index has fallen from 98 in September's survey to 97.6 in October. “The decrease unwinds much of the recovery in the index since banking-system strains weighed on sentiment earlier this year,” Oxford Economics said.

Businesses still attach only a small probability to severe weakness in the global economy next year, however. Businesses see only a 1-in-40 chance of growth turning out as weak as in 2009 during the global financial crisis.

The index indicates a notable decline in business expectations for global growth in the year ahead. The Global Business Sentiment Index has fallen in October to 97.6, down from 98 in July.

“This implies that businesses' mean expectation is for world GDP in a year's time to be 2.4% below the level forecast before the coronavirus pandemic,” Oxford Economics said.

“Businesses have become more concerned over downside risks to the global economy. They now perceive an increased risk of global recession, though respondents perceive only a 1-in-40 chance of a similar economic weakness experienced during the global financial crisis,” Oxford Economics concluded.

1123 GBL Global Business Sentiment Index OXFORD ECONOMICS