Global Risk Report Quarterly Update – Q1 2024

Global Risk Report is based on GlobalData Country Risk Index (GCRI) which is a unique country risk-rating model that determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is formulated to help firms prepare their global business strategies on the basis of historical developments in an economy and also their future expectations.

The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental and legal data from a range of recognized national and international statistical sources, and incorporates proprietary data from GlobalData Economics Research. The model also features expert analytical judgment from in-house economists and takes into account their insights and opinions. By applying a robust approach to assessing risk, GlobalData analysts ensure that strategists have an effective tool to assess current trends and risks facing the economies across the globe.

The twenty-third update version of GlobalData Country Risk Index (GCRI) Q1 2024 ranks Switzerland at the top followed by Denmark and Ireland. 29 countries were identified in the low-risk zone, 54 countries under medium risk, 64 countries under high risk and 6 countries in the very high-risk zone in GCRI Q1 2024.

Global Risk Report - Regional Analysis

The key regions contemplated in the Global Risk Report Q3 2023 are Asia-Pacific, Europe, the Americas, and the Middle East and Africa.

Asia-Pacific: Asia-Pacific has the second-lowest risk score in the world at 41.8 in Q3 2023. The region is home to many emerging and developing economies, including Vietnam, the Philippines, and India. These countries have witnessed tremendous growth lately owing to factors such as increased domestic activity, rising investments, and a rebound in tourism.

Americas: The Americas retained its second-highest global risk ranking with a risk score of 45.8 in Q3 2023, a marginal decrease from Q3 2022. The decline is attributed to factors such as alleviated inflationary pressures, a halt or reduction in the policy rate, a decrease in the unemployment rate, and an increase in consumer spending.

Europe: Europe remains the world’s least risky region, with a reduced risk score of 32.7 in Q3 2023, compared to 33.4 in Q3 2022. After successfully overcoming challenges posed by the pandemic and energy price shocks, Europe faces the complex task of reinstating price stability while nurturing strong and environmentally sustainable long-term growth. The growth forecast is shaped by the interplay of tightened macroeconomic policies and a resurgence in real incomes, propelled by decreasing inflation and rising wages.

Middle East and Africa: The MEA region recorded a risk score of 53.5 in Q3 2023. The region’s risk profile is heightened due to economic instability because of declining oil production and geopolitical instability arising from ongoing conflicts. Compounding the challenges is a deteriorating humanitarian crisis in the area.

Regional Risk Level – Q3 2023

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Key Highlights

Global risk: In Q1 2024, the GlobalData Country Risk Index fell slightly to 57.21 from 57.31 the previous quarter, owing to improvements in inflation and employment, which boosted consumer sentiment. Emerging markets, excluding China, demonstrate resilience, potentially stemming from efforts in diversification and infrastructure enhancements. Nevertheless, obstacles persist, including elevated borrowing expenses and economic instability in China. Geopolitical tensions, and trade disputes, continue to exert influence, underscoring the need for adept management to maintain global economic stability.

Asia-Pacific: Despite being the world's second-lowest risk region, Asia-Pacific’s risk score increased slightly, from 55.61 in Q4 2023 to 56.17 in Q1 2024, primarily due to economic uncertainty in China. The country's economic outlook has been hampered by challenges such as a persistent property crisis, low consumer spending, rising youth unemployment, and structural economic issues. However, other emerging economies in the region are expanding rapidly as a result of increased domestic activity, rising investments, and a resurgence in tourism. Countries such as Vietnam, the Philippines, and India continue to thrive, supported by positive trends in investment and consumption.

Americas: In Q1 2024, the Americas maintained its position as the second-highest global risk region, with the risk score increasing from 58.53 in Q4 2023 to 58.86. The US economy faces challenges from elevated consumer debt and persistently high interest rates, while Canada grapples with similar issues due to strict monetary policies affecting business sentiment. In Latin America and Caribbean, security concerns persist due to escalating violence associated with narco gangs. Additionally, rising protests in countries like Mexico, Argentina, Cuba, and Haiti raise further concerns about stability in the region.

Europe: Europe maintains its status as the world's least risky region, with a risk score of 43.78 in Q1 2024, showing a marginal decrease from 44.29 recorded in Q4 2023. The decline in risk score was underpinned by several positive factors, including the easing of inflationary pressures, a strengthening labor market, and a gradual uptick in consumer confidence. However, despite these encouraging trends, uncertainties loom due to ongoing geopolitical tensions. Furthermore, the potential for disruptions to global trade remains a key concern.

Middle East and Africa: The Middle East and Africa retain their status as the region with the highest risk level, with a risk score of 66.93 in Q1 2024. Escalating tensions between Israel and Iran, coupled with the ongoing conflict between Israel and Hamas, pose significant threats to regional stability. Additionally, the region faces challenges exacerbated by a worsening humanitarian crisis. However, there is a slight improvement in the risk score from the previous quarter, with the risk score decreasing from 67.29 in Q4 2023. This improvement is partly attributed to a rebound in Sub-Saharan Africa, driven by declining inflation rates and increased private consumption.

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