Global Economic Outlook – February 2024

Geopolitical conflict risks the biggest economic wins of 2023.

"The ongoing ceasefire negotiations in the Middle East carry immense weight, as they hold the key to mitigating the supply- side disruptions reverberating across global businesses. These disruptions stem from the forced re-routing of shipments passing through the Red Sea, undermining the hard-won normalization of supply chains achieved throughout 2023. Concurrently, fluctuating energy markets are fueling concerns among businesses and policymakers about potential oil price spikes reigniting inflationary pressures. Furthermore, February marks the second anniversary of the Russia-Ukraine conflict, a pivotal event that has been overshadowed by more recent geopolitical developments but which is still inflicting significant blows on European manufacturing. Its repercussions are also poised to influence regional politics leading up to the June European Parliament elections. Meanwhile, the simmering tensions on the Korean Peninsula remain a matter for close observation, for their ability to dampen investment sentiment.” – Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet.


Global Economic Outlook

The violence that began in the Middle East on October 7 continues to escalate. Apart from Israel and the Palestinian territories, Yemen, Syria, Iraq, Jordan, Iran, and Pakistan have all become embroiled in some form of violence over the past four months, including cross-border fire. This can be largely attributed to the heavy presence of militias and terrorist groups in these countries. Consequently, security threat levels are elevated across the region and business operations are difficult. The most obvious impact on commercial activity has been on shipments passing through the Red Sea, which have been forced to re-route under attacks from Houthi rebel groups, elevating shipping costs and stretching delivery timelines. It has also added to volatility in the global energy markets. More importantly, the escalating conflict has reversed the gains made on global supply-side normalization and remains the biggest risk to hard-earned global disinflation – the two big economic accomplishments of 2023. Dun & Bradstreet's Global Supply Chain Continuity Index captured this dynamic as it fell 6.3% for Q1 2024, with suppliers’ delivery time and delivery cost indices both deteriorating. In this context, for the global economy, a lot is riding on the ceasefire discussions that are currently underway between Israel and Hamas.  

February also marks the second anniversary of the start of the Russia-Ukraine conflict, which, at present, seems to be at a stalemate (a perception partly caused by a shift in focus to the Middle East). From a business impact standpoint, events outside the zone of action, particularly in the EU, have gained more prominence than the conflict itself. These impacts range from immediate concerns about manufacturing performance, the cost of living, and energy security in the largest European economies, and go on to cover longer-term themes such as the bloc’s first serious attempt at expansion in years, which includes Ukraine’s bid for membership. While the conflict has seemingly brought the European bloc together, it has also led to the emergence of new disagreements – the EU recently settled on a EUR50bn financial package to sustain Ukraine’s economy but not before weeks of strong opposition from a lone holdout, Hungary. These trends will shape European politics in the run up to and after the European Parliament elections in June. 

Geopolitical rumblings are also on the rise in the Asia-Pacific region, with North Korea issuing fresh threats, in words and in actions. Incessant saber-rattling may not necessarily lead to a conflict, but such posturing is unhelpful for the business and investment climates. In summary, geopolitics remains the biggest risk to the global economy today, dampening investments, disrupting supplies, and weakening the fight against inflation. There is one silver lining in all of this. High geopolitical temperatures around the world seem to have raised the stakes of stability for the U.S. and Mainland China. This was evidenced in their willingness to diffuse the Middle East, in keeping North Korea in check, and in Beijing’s relatively muted reaction to a Democratic Progressive Party (DPP) victory in Taiwan Region’s January 2024 polls. Mainland China may be keen to hold on to this new equilibrium until its economy fully stabilizes. As for the U.S., the outcome of the nomination races and the presidential election in November 2024 will be the key determinant of its foreign policy direction.   


Movement in Country Rating & Environment Risks

Note: Colors indicate Rating upgrade/Improvement in outlook, Rating downgrade/Deterioration in outlook


Movement in Risk Dimensions

Source: Dun & Bradstreet

Rating Changes


Azerbaijan: Economic growth is set to pick up pace in 2024 amid a recovery in oil and gas output and government investment in the recently reintegrated Nagorno-Karabakh region. Robust foreign exchange earnings support the de facto peg, giving rise to our anticipation of sustained exchange rate stability over the medium term.

Cambodia: Cambodia's economy is set to surge in 2024 on the back of a revival in tourism, robust exports, and comprehensive efforts to boost supply chain infrastructure. The government's ambitious blueprint to revamp the transportation sectors, backed by a proposed investment of USD50bn, presents a significant boon for the economy.

Thailand: Recovering goods exports and continuing growth in tourist arrivals following visa-free access for Chinese mainlanders will complement significant demand stimulus from a planned domestic digital wallet initiative, helping drive faster growth in 2024.

Hungary: The economy is emerging from a recession, with a broad-based recovery supported by the release of frozen EU funds. Hungary will assume the European Council’s rotating presidency in the second half of 2024, giving it a platform to push its position on issues such as migration and Ukraine. 



Ecuador: Amid escalating gang violence, the Ecuadorian government declared a nationwide state of emergency in January, following incidents of mass hostage-taking, the hijacking of a live television broadcast, and the detention of prison guards, adding to the country’s fiscal and financial challenges.

Norway: Manufacturers are likely to experience increased pressure on margins in Q1 2024 amid elevated energy costs and higher U.S.-dollar-denominated input costs. The diversion of some maritime routes traversing the Suez Canal risks disrupting supply chains linking Norwegian manufacturers and consumers with East Asian suppliers.

Key Market Updates

Mainland China: Mainland China’s 2023 GDP numbers beat government expectations; businesses now turn to 2024 provincial growth targets to identify high-growth regions and sectors and align their investment strategies. 

United Kingdom: The government has published a strategy to improve critical imports and supply chains for key goods, including medicines and raw materials. The proposals should help make for a more secure trading environment for businesses.

Germany: The German economy shrank 0.3% in 2023. Growth was held back by soft consumer spending, which sank because of high inflation and weak external demand for exports. In addition, protests have gathered pace since the start of the year in response to the government phasing out tax breaks for farmers.

France: A major cabinet reshuffle, the selection of a new prime minister, and the announcement of key reforms have brought new energy to the government. The broader economy appears to be stabilizing, despite challenges such as supply chain disruptions.

India: The Red Sea crisis has exacerbated supply chain concerns for Indian exporters and importers, and poses a potential threat to headline inflation, which is inching closer to the central bank’s upper limit. The costs of container shipments to Europe via the Red Sea have surged by three to four times, with many companies diverting their routes, leading to prolonged transit times.

Argentina: President Javier Milei withdrew his ambitious reform bill from the lower chamber as opposition lawmakers rejected key proposals in an article-by-article vote. This move injects uncertainty into his potential reform plan and adds more volatility to Argentina's already precarious economic situation.

Cyprus: Cyprus exhibits a stable economic outlook despite rising geopolitical uncertainties relating to aggressive posturing by Türkiye and a potential refugee influx due to the Israel-Hamas conflict. Business and consumer confidence both rose in January 2024 as the economy proved resilient to the general downturn in Europe due to the strong performance of services, construction, and manufacturing.

Poland: The country is in the process of receiving pending EU funds following the formation of the new government. It has registered better-than-anticipated Q3 2023 results and economic recovery appears in sight for 2024, with net exports turning positive, the trade accounts moving into surplus, and the release of EU funds strengthening the currency.

Nigeria: Nigeria has devalued its currency, the naira, for the second time in eight months, sending the currency 44% lower. Though the move will likely lift inflation in the short term, further out, allowing the currency to free float should encourage more investment into the country.

Sudan: Business continuity continues to be adversely affected by large-scale fighting in the capital, Khartoum, and across several other regions. Major roads are closed, and companies have been forced to suspend production as transport and energy infrastructure have stopped working effectively.

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