A quarterly report on global business optimism levels shows bosses are less sanguine now about the state of supply chain than towards the end of last year.
The Global Business Supply Chain Continuity Index – from business-decisioning data and analytics provider Dun & Bradstreet – reflects optimism levels around economic and financial issues, as well as on supply chain.
The Q1 2024 report shows a downturn in global supply chain continuity due to:
- Geopolitical tension (Ukraine-Russia, Israel-Palestine)
- Trade disputes (US-China)
- Climate-related disruptions in maritime trade, causing both higher delivery costs and delayed delivery times (Panama Canal).
The Global Supply Chain Continuity Index fell sharply, by 6.3% for Q1 2024 compared with Q4 2023, with suppliers’ delivery times and delivery costs indices both falling away.
C-suite executives report that climate-induced disruptions and trade disputes are hitting optimism levels. This index fell by equally for both advanced and emerging economies, with each nosediving by 6% on Q4 2023.
Business optimistic, despite challenges - D&B
However, the report also suggests that businesses – despite having endured a litany of serious challenges, including the pandemic, wars, and economic headwinds – are now adopting “a growth mindset”, something that is reflected in the overall optimism index.
The Overall Index increased by 6.6%, suggesting businesses in advanced economies feel more confident about their ability to absorb geopolitical and policy shocks, and that they are focusing more on growth opportunities.
The ESG Index, meanwhile, is up by 7%, which is in contrast to a 4.7% fall in Q3 2023. This, says the report, reflects “a positive shift in the commitment of firms worldwide towards sustainability practices”.
It adds: “Favourable sentiment towards ESG practices reflects an elevated awareness of sustainability, underscored by the recent agreement among nations at the COP28 conference.”
Dun & Bradstreet International President, Neeraj Sahai, said: “Global businesses are now maintaining a balance between optimism and realism and are adopting a more pragmatic stance towards their future.
“Leaders have endured frequent economic disruptions over the past few years and have become more adept at dealing with them. However, they remain cautious of geopolitical conflicts and supply chain disruptions.
Business optimism 'tinged with caution'
“This shift in mindset suggests anticipation of additional growth in the forthcoming quarters, albeit with an underlying sense of continued caution."
Arun Singh, Global Chief Economist, Dun & Bradstreet said that, despite the acknowledgement of economic and political headwinds across the globe “it’s important to note business leaders are expected to begin 2024 with a relatively positive economic outlook”.
He added: “However, confidence in the resilience of supply chains is facing pressure due to continued geopolitical tensions and climate events.
“These factors have compelled companies to reroute supply chains, which has led to congestion along transit routes. Business leaders are experiencing both higher delivery costs and delayed delivery times – a reminder of pandemic-related challenges.”
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