The consensus among economists is that the global economy is slowing and inflation is falling. Indeed, the IMF is predicting that world growth will fall from 3.5% in 2022 to 3% in 2023, and is forecasting 2.9% for 2024. On the inflation front, the decline is gradual and largely due to restrictive monetary policies: the IMF is forecasting inflation at +8.7% in 2022, +6.9% in 2023 and +5.8% in 2024. Even so, household consumption is predicted to stagnate next year as people choose to invest in savings.
But while the shadow of a global recession seems to be receding, business failures are making a serious comeback.
Falling global demand and rising costs have taken a heavy toll on corporate profitability and liquidity. Most countries are experiencing an acceleration in insolvencies, with some – such as the United States, South Korea and the Netherlands – seeing rises of over 40%. Overall, by the end of the year, insolvencies are expected to be up 6% on 2022. A further rise (+10%) is expected in 2024 (vs 2023).
The year 2024 might see significant shifts in the political landscape. Almost 50 countries, representing 75% of the world’s GDP, will be holding national elections (presidential and legislative):Taiwan, Iran, Russia, India, the European Union, the USA…
It is probable that these elections will have an impact on the different country economies which might, in turn, affect the payment performance of companies.
Among the main changes recorded by G-Grade during the year, the most significant are as follows:
- Uganda: The G-Grade improved by +0.75 points from 7.50 to 6.50. The discovery of new oilfields is opening up opportunities as the country may no longer need to import oil with a resultant impact on tax revenues.
- Bulgaria: The G-Grade improved by +0.5 points from 4.50 to 4.00. After seeing its economic prospects plummet following Russia’s invasion of Ukraine, the country has managed to contain the recession and is expected to post 3% growth by 2024 (IMF).
- Colombia: the rating fell by 0.5 points. The economy suffered more than expected from rising interest rates and inflation, which had a severe impact on household consumption.
- South Africa: Although the economy is expected to stagnate in 2023, inflation has helped to generate a substantial budget surplus, enabling the current account deficit to be reduced.
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