Businesses worldwide have turned more pessimistic on near-term recovery prospects as supply chain crunch remains a concern.
Based on the latest Global Risk Survey of think tank Oxford Economics for October, a large proportion of businesses have become more downbeat, with supply chain disruptions still the biggest risk to global economic rebound.
Businesses see persistent disruption as a greater threat to recovery than COVID-19 developments. Respondents have downgraded their expectations for 2021 growth, while downside risks are perceived to have risen to their highest level in a year,” Oxford said.
“With only 22 percent of those affected by the disruption judging that the worst of the crisis has passed, businesses report greater pessimism over global economic prospects for the first time this year,” it said.
The flash survey was completed by 148 businesses across sectors, including financial institutions, industrial manufacturing and materials, professional and business services, real estate, real estate finance and infrastructure, and travel, hospitality, and leisure, among others.
Thirteen percent of the respondents were from the Asia Pacific region.
The survey revealed that 42 percent have become more negative versus the 36 percent that has turned positive over the past months.
Against this backdrop, almost half of the respondents at 56 percent said they view risks heavily to the downside and only a small proportion of businesses see risks to the upside.
Further, Oxford said businesses see more chance of a weaker outturn and less chance of stronger growth. As a result, firms’ expectation for global growth this year has fallen to 4.4 percent, below forecasts of 5.6 percent.
Apart from weaker near-term growth prospects, price pressures are perceived to have risen.
Based on the survey, supply chain disruption was the biggest concern of businesses in the near term, followed by inflation pressures, and further COVID-19 waves. Others include China’s economic slowdown and rising global oil prices.
More than half of respondents at 56 percent said they are affected by the supply-chain crisis, with those affected generally expecting disruption to persist. Some 64 percent see disruption ending only after mid-2022.
On the other hand, medium-term risks are varied with climate change and high debt levels topping the list. Other risks considered are repeated COVID-19 waves, geopolitical risks, and plunge in asset prices.
Source: Philstar and Oxford Economics