The Q3 2023 Global Business Optimism Insights report presented by Dun & Bradstreet finds that the global economy is expected to grow, though slower than it did last quarter, due to the decline in advanced economies in contrast with the growth in emerging economies. Nordic businesses are the most pessimistic about their supply chain continuity, followed by U.S.-based businesses. The Global Business Investment Confidence Index has improved the most for Russian businesses, yet it remains the lowest among the 32 economies.
“The declines in Global Business Optimism, Supply Chain Continuity, and Financial Confidence indices reflect the underlying stress in the global economy,” says Arun Singh, global chief economist, Dun & Bradstreet. “While the unprecedented monetary tightening has helped control inflation in some countries, it has also introduced the specter of an economic slowdown and stress in the balance sheets of businesses. However, the global economy has not fared as badly as feared, as most businesses anticipate a 2% to 6% growth in their investment levels across technology, real estate, product development, and sustainability initiatives, offering hope for improvement in economic conditions.”
Key takeaways:
- The Global Business Optimism Index declined 1.5% in Q3 2023, compared with Q2 2023; it declined 2% for advanced economies and grew 0.4% for emerging economies, indicating that businesses exposed to advanced economies should exercise caution and revisit their growth strategies, such as enhancing client coverage across emerging economies. Moreover, businesses across financial services, automotive, and metals and mining are least optimistic, whereas those across utilities, trade, and hospitality are the most optimistic for growth.
- The Global Business Supply Chain Continuity Index declined 5.8% in Q3 2023, compared with Q2 2023, due to increased delivery time and cost. Strengthening climate and emission regulations have lowered supply chain continuity for businesses in mining and metals, construction, and transportation, reiterating the importance of sustainability across all tiers of suppliers.
- The Global Business Financial Confidence Index declined marginally in Q3 2023 due to continued stress on balance sheets and unprecedented monetary tightening, suggesting that businesses must recognize that the current economic landscape necessitates a more proactive approach to credit risk mitigation. Businesses in the Czech Republic, France, Mexico, Spain, and the United States are the least confident about their financial conditions, whereas those in Japan, South Korea, and Turkey are the most confident.
- The Global Business Investment Confidence Index increased slightly in Q3 2023 as businesses expect the capacity utilization rate to go up this year, indicating optimism around investment recovery through 2023. Technology and R&D investments top the list of expected capital expenditures, with nearly 40% of businesses anticipating 6-10% growth in investments for these categories, indicating that businesses exposed to these sectors can leverage underlying growth opportunities.
- The Global Business ESG Index for continental Europe lags the United States and Asia due to differing energy security interests and approaches to renewable energy within the region.
