After a challenging year with significant economic and geopolitical volatilities caused by a sharp increase in global inflation and simultaneous hike of interest rates by Central Banks across regions to contain rising inflation, severe energy crisis, and energy supply chain disruptions caused by the Russian Federation’s invasion of Ukraine and weak economic growth in many advanced economies with spillover effects on emerging markets and developing economies (EMDEs), 2023 and 2024 seem to become not less difficult.
According to the latest World Bank Global Economic Prospects report dated January 2023, [1] global growth is projected to decline sharply in 2023, to its third weakest pace in nearly three decades, overshadowed only by the 2009 and 2020 global recessions. Investment growth in EMDEs is expected to remain below its average rate of the past two decades. Further adverse shocks could push the global economy into yet another recession.
Given the rather grim economic forecast for the coming two years, businesses are well advised to reassess and refine their corporate and business strategies and risk management frameworks across jurisdictions to sufficiently address adverse economic effects. However, each crisis offers at the same time plenty of opportunities for agile and creative organizations to restructure and improve their overall business performance by realigning their portfolio management, optimizing their business verticals and functions by adopting innovative technology and processes helping to streamline costly operational structures, and benefiting from newly opened up business opportunities in domestic or foreign markets.
Besides reinforcing sensible and robust organizational risk management frameworks mitigating comprehensively potential business, legal, compliance, and financial risk among others, foresightful decision-makers should not shy away to make bold and prudent business decisions setting the ground for the growth of their organizations for the time when global growth picks up again. Expanding into new markets can be challenging for various reasons, a consistent, sustainable, and judicious expansion strategy is often the only constant factor in stormy times to successfully diversify and guarantee business growth.
While EMDEs are particularly affected by global economic and geopolitical volatilities and adverse impacts of climate change and natural disasters, EMDEs offer at the same time a resilient private sector, and profitable business opportunities often due to their substantial size of respective underserved markets. They also serve as a fertile ground for innovative and creative business ideas addressing local problems and offering viable and scalable (technology-based) solutions.
While many businesses face headwinds and must manage challenging times ahead, for agile organizations periods of slow growth offer the opportunity to reassess their growth model, governance systems, and operational structures helping to navigate successfully those periods and to gain greater levels of resilience in the future.
[1] https://openknowledge.worldbank.org/bitstream/handle/10986/38030/GEP-January-2023.pdf;
