Global Economic Outlook: 2024

How can businesses navigate uncertainty & risk in the fast-changing world?

The Global economy continues to show resilience, defying fears of stagflation or recession.

Projected global growth for 2024 & 2025 is 3.2%, lower than the historical (2000-19) global average of 3.8%.

Global inflation is projected to decline but efforts to bring this down continue. Overall outlook is still weak, while risks are broadly balanced, but vulnerabilities remain. Fear of geopolitical tensions spilling over still looms. Disruptive fiscal adjustments could weaken growth.

Global Outlook

Uneven Recovery due to increased Uncertainty

Economic growth is expected to be uneven in the Middle East for 2024. 
Uncertainty has risen due to the ongoing conflicts, shipping disruptions, and reduced oil production. Escalation of the Israel-Gaza conflict & increased disruptions in the Red Sea route would have a serious economic impact, including trade & tourism in the region.

Long Conflicts & the Economic Scars

The conflict between Russia-Ukraine, Israel- Gaza will have a medium-to-long-term impact on economic growth in the region due to reduced investments, revenues, exports, and consumption. On top of this, there is heightened Uncertainty in the South China Sea, which could have a deeper impact on the global growth outlooks for major markets, including developing ones. 

General Elections in major economies

With general elections happening in some of the large economies that contribute over 50% of global GDP, there is an increased layer of complexity making the economic forecasts difficult for the year.

Global Trade

As trade exits recession, the recovery will be limited by the inventory glut. Disruptions in global shipping and protectionism mean that the pace of recovery is capped, and global trade growth will remain below its long-term average.

Central banks

The ECB will be compelled to cut rates just before the Fed in July, with the BoE following suit in August. Almost all major emerging markets will also start a cautious easing cycle.

What factors could help businesses to navigate through these challenges?

1. Diversify client bases & supply chains: Businesses need to review if they have a concentration of risks limited with few buyers & look at diversifying the customer base. On the supply side, it would be ideal to diversify sourcing from multiple suppliers and from different geographies, if possible.
2. Strengthen financial risk management: Intensify credit risk evaluation of existing & potential buyers. Proactive risk management will help businesses to identify vulnerabilities & take necessary actions. Stay close & engage more with the customers & transparently share any concerns if any & follow up on payments to keep the credit risk under control.
3. Stay agile & closely connected to the market: It’s important for businesses to stay agile as this helps them to respond to changing risk environment on time & helps in taking necessary actions to mitigate any risks.
4. Manage capital & inventory efficiently: Reduced demand during a downturn can result in excess inventory, which can tie up capital and lead to write-downs or liquidation at discounted prices. During tightened credit market situations, lenders could become more risk averse, so it would be important for businesses to manage their cash flows efficiently. 

Most of the above aspects could be managed with a well-structured trade credit insurance solution from a strongly rated credit insurer.

Trade Credit Insurance provides your business with financial protection and peace of mind by indemnifying you against losses incurred due to insolvency or protracted default. Credit Insurance helps companies to have a detailed insight on the credit worthiness of buyers, suppliers, help identify new markets, keep you well informed of the changing market dynamics & sector risk; all this with an assurance that you will be paid in full if buyers go under. That safeguards the business’s cash flow, maintains its liquidity, and sustains uninterrupted operations, even in the face of widespread insolvencies.

Experience counts:

Specialised broking firms backed by teams with solid credentials play a vital role in this regard.

Howden Credit & Political Risk team is strongly focused on providing high-quality service to our clients and to delivering tailor-made solutions to protect companies of all sizes and sectors against payment defaults. The market potential for and benefits of trade credit insurance are high in the region, and we continue to increase awareness of its value to our regional hubs and its businesses.

With over 100 years of collective experience, our team based in Dubai has senior profile executives from the world’s leading trade credit insurance companies where they managed risk underwriting, commercial underwriting, and claims management functions.

Sources- IMF, Allianz Trade, Atradius

Please get in touch with our experts :

• Mahan Bolourchi, Managing Director- Credit & Political Risks - MEA
  [email protected]
• Pradeep Bharathan, Commercial Director- Credit & Political Risks - MEA
  [email protected]