Country risks: key business risks and opportunities

• While 21 countries now score better and only 4 worse, the trend was completely different in 2022. In that year, the risk profile of only 8 countries improved and 17 deteriorated. In 2022, the risk assessment was largely influenced by the war in Ukraine. In 2023, the economy showed remarkable resilience despite aggressive interest rate policies and increased global turbulence.
• Africa recorded the highest number of improvements (10), followed by Europe (6). In Asia and the Americas, the situation improved only in China and Uruguay, respectively. Despite this improvement, Africa remains the continent with the greatest problems in terms of liquidity and access to international markets. Almost everywhere, liquidity risks have increased.
• The global risk of non-payment in 2023 is slightly above 2 (medium risk), which is stable compared to 2022 and almost back to 2019 levels. Regionally, Africa's average risk is above 3 (significant), while the Middle East, Latin America and Eastern Europe (including Russia) are close but just below 3 (significant). Asia-Pacific is slightly above 2 (medium) and Western Europe and North America are close to 1 (low).
• As an industry, the wholesale sector faces numerous challenges, including scarcity of staff, higher costs and the urgent need for climate and energy transition. Entrepreneurs are forced to adjust their strategies. Both large and small players need to work on sustainability and digitalisation to stay relevant.

According to Johan Geeroms, our Director of Risk Underwriting Benelux, entrepreneurs are on their guard: "There is a lot of uncertainty in the market. It's difficult for companies. Margins are also under pressure in many sectors. This has been the case for some time. At some point, there's no room for manoeuvre. The temptation is to pay the bills later. This triggers a snowball effect. By paying later, companies put each other in difficulty. We are tracking these changes in payment behaviour. In this report, we describe the circumstances faced by entrepreneurs in each country. We offer an overview of the business landscape".

For the deterioration mentioned in 2024, Johan Geeroms believes that the expected reduction in interest rates and lower inflation could have a calming effect. It is not certain that the global improvement in country risk will continue. We expect a deterioration in 2024. The main risk factors we have identified for 2024 are as follows:

• Liquidity constraints in an environment of high public and private debt and high interest rates.
• Below-potential growth in most regions and a decline in companies' pricing power, depressing sales growth.
• Increase in the number of business insolvencies (+8% worldwide by 2024), with Europe and the United States leading the acceleration.
• Changes in global supply chains.
• Geopolitics are becoming increasingly polarised.