Dun & Bradstreet: The Supply Chain Outlook for Q1 2025

Business optimism around the world is on the decline, driven by concerns over sluggish economic growth, geopolitical instability and trade policy uncertainties.

That's according to Dun & Bradstreet’s Q1 2025 Global Business Optimism Insights report, which reveals a 12.9% quarter-on-quarter drop in optimism – representing the first recorded decline since the index was launched in Q3 2023. 

The survey, conducted in November 2024, indicates a shift from the higher optimism levels seen in late 2024. Companies appear to be adopting a more guarded stance, particularly in relation to supply chain stability and investment decisions, amid evolving economic and political pressures.

While the downturn reflects a recalibration, 30 of the 32 surveyed economies maintain optimism levels higher than Q1 2024, suggesting the decline is more of a market correction than a sign of widespread pessimism.

Diverging supply chain optimism

Supply chain resilience continues to vary sharply depending on business size.

Neeraj Sahai, President of Dun & Bradstreet International, explains: "Optimism levels for supply chain risks vary across business size, with large businesses indicating increased optimism and resilience by leveraging their economies of scale and reliance on alternative sourcing.

"Medium-sized businesses experienced the sharpest deterioration with a 36% decline, indicating that these businesses have not been able to counter the challenges posed by cross-country trade, while simultaneously facing insufficient local supplies."

Small businesses fared better, recording only a 3.5% decline, thanks to their ability to localise sourcing and adjust production bases. 

Overall, the Global Supply Chain Continuity Index fell 10.4% in Q1 2025 after three consecutive quarters of improvement. Persistent hurdles, including freight costs, container shortages, geopolitical disruptions and payment delays, have compounded supply chain vulnerabilities.

Economic indicators signal waning confidence

Dun & Bradstreet's survey sheds light on some of the broader economic trends affecting businesses.

The Global Business Financial Confidence Index decreased by 8.9%, with more than 90% of economies reporting declines. The drop reflects a challenging macroeconomic landscape marked by weak demand, growing balance sheet risks and reduced financial risk appetite. SMEs were particularly affected, while optimism among larger businesses rose 12.7%, supported by their capacity to mitigate financial pressures.

Investment confidence also dipped, with the Global Business Investment Confidence Index declining by 4.7%.

However, it remains 12% above the five-quarter average, buoyed by central banks’ commitments to lower policy rates. Despite this, fewer businesses expressed a need to raise long-term funds, falling from 71% in Q4 2024 to 66% in Q1 2025. Notably, M&A remains a positive aspect, with 78% of businesses expecting favourable conditions for such activity.

Meanwhile, sustainability is an emerging priority, as demonstrated by the Global Business ESG Index, which rose 2.4%. The survey highlights contrasting approaches between the US and the EU, particularly in automotive manufacturing, where differing policy expectations have influenced sustainability budgets.

Trade exposure and fresh challenges ahead

Dun & Bradstreet's report also examines the global trade outlook. More than 80% of surveyed economies reported a decline in optimism for new export orders. Nearly half of these economies have at least 10% trade exposure to the US or China, leaving them particularly vulnerable to ongoing geopolitical tensions.

Arun Singh, Global Chief Economist at Dun & Bradstreet, warns of the challenges ahead: “Businesses have entered the new year with subdued expectations for Q1 2025 and are grappling with supplier risk. Only 51% of businesses expressed confidence in managing supplier concentration risk, compared with 59% in Q4.

"Further, central banks globally are implementing interest rate cuts, yet the cost of capital is perceived to remain elevated, indicating heightened credit risk. This is also accentuated by lower optimism for sales and profitability.”

Despite these challenges, the overall outlook suggests businesses are recalibrating their expectations rather than facing an outright downturn. As global markets adjust to a volatile economic and geopolitical environment, businesses of all sizes continue to navigate supply chain complexities and shifting financial pressures.

Neeraj concludes: “Survey respondents have a guarded outlook for the quarter ahead due to the evolving economic and political landscape that may impact how the world does business."

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