Businesses see tighter policy as the greatest economic risk

Risks to the global economy remain skewed to the downside, based on our latest survey of risk perceptions. But businesses no longer see war as the key threat to the economic outlook.

Businesses’ key concern is now an advanced economy recession in which higher inflation and rapid central bank tightening squeeze real incomes and weigh heavily on property and financial markets. With central banks changing the way they react to economic conditions, respondents see more than a one in four chance of this scenario materialising.

Moderate expansion is viewed as the most likely outcome in the near term, however. The mean expectation for world GDP growth remains well below our baseline forecast, by around 0.7ppt for 2022. At the same time, businesses perceive a reduced chance of global economic contraction, as well as a fall in the odds of strong growth this year.

Business sentiment appears to vary markedly across sectors and regions. A greater proportion of respondents from financial institutions and the professional and business services sector view risks as heavily skewed to the downside. By contrast, those businesses focused on the Asia Pacific region perceive a relatively high chance of more rapid global economic growth.

The survey was completed by 167 businesses from 13-22 June

What you will learn:

• Why most businesses report becoming more negative about global growth prospects

• Why moderate growth is seen as most likely for 2022 

• Growth expectations for 2023