Global growth opportunities outweigh risks – report

Global growth opportunities currently outweigh the elevated geopolitical and economic risk landscape, according to a new report from Marsh.

Marsh’s 2023 Political Risk Report examines the trends in the global political and economic landscape that will impact multinational corporations and investors in the coming year. The report, published by Marsh Specialty, identified four areas in which increasing risk threatens global trading, security and investment environments:

Persistent political instability
Economic retrenchment
Competition for strategic resources
Supply chain diversification

The report also identified global economic growth drivers that Marsh believes present opportunities that outweigh those risks.

Marsh said that the global political and economic environment was likely to remain fragile throughout the year, with a number of factors coming together to amplify the impact of global risks. For example, political instability – especially when compounded by the impact of inflation – threatens the economic and investment environment and, in some cases, the societal structure of emerging markets, Marsh said.

The World Economic Forum’s Global Risks Report 2023, published in collaboration with Marsh McLennan and others, called the amplifying effect of related risks “polycrises” and pointed out that these polycrises have turned nations’ focus inward. Marsh’s Political Risk Report said this inward focus on economic security – which often negatively impacts free trade – was another major development threatening global trade, security and investment.

Opportunities outweigh risks

Despite the elevated risk environment, Marsh said there were signs that the perceived level of risk was greater than actual risk levels. The report said that at least four global economic growth drivers could spur economic recovery and improve security.

The report said that the lockdown backlog of infrastructure investment indicates a rise in future activity and expansion across the globe, while the push to hit 2030 net-zero energy transition goals will power a wave of innovative investment activity. The need to diversify supply chains to create greater food and energy security will also attract investment, as will the spike in government defence spending worldwide.

“While it may be unnerving, there are many opportunities for businesses and investors to grow in today’s elevated geopolitical and economic risk environment,” said Nick Robson, global head of credit specialties at Marsh Specialty. “If the risks are identified, managed and mitigated effectively, the prospects for short, medium and long-term growth frequently outweigh the risks presented by short-term volatility.”

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