Businesses perceive tail risks to be diminishing as economies learn to live with Covid and supply chain pressures ease

Perceptions of the nature of upside risks have shifted, and business uncertainty over the economic outlook has declined, according to the lastest Oxford Economics Global Risk Survey.

It found that businesses perceive tail risks to be diminishing, while economies learning to live with endemic Covid is now seen as the top upside risk to global growth.

Overall, however, businesses still believe risks are skewed to the downside. The potential impact of higher inflation on monetary policy and financial markets is now a more prominent concern.

High debt levels and climate change are seen as key medium-term risks – cited as very significant risks to the global economy by around two-fifths of businesses. But geopolitical risks, a plunge in asset prices, repeated Covid waves, and disappointing emerging market recovery are also cited by a fifth or more respondents.

Overall, more businesses are becoming more negative (44%) about global prospects over the past month than more positive (32%), although a larger proportion of respondents report ecoming more positive on the month than in December’s flash survey.

Supply-chain concerns have eased somewhat, according to respondents. Only 1-in-10 see disruption ending in the first half of the year. By contrast, more than a third of businesses (36%) see disruption persisting into 2023 or beyond, compared with around 1- in-5 in December’s flash survey.