Focus On 12 April 2023

Focus On Risk & Opportunity Map 2023 - Fragile stability focus on Pathways to a sustainable growth.

In the last three years, the world has suffered three shocks of extraordinary magnitude: the pandemic emergency, Russia’s invasion of Ukraine with the consequent energy and food crisis, and the return of sustained inflation and the end of ultra-expansive monetary policies. Global economic prospects in 2023 are relatively weak, particularly due to the potential materialisation of the effects of less favourable financial conditions worldwide, in a context of fiscal policies generally characterised by less room for manoeuvre. However, an easing of inflationary pressures, greater than expected, is increasing the likelihood of the scenario improving.

The 2023 Risk Map reveals a relatively unchanged average global risk compared to the previous one, which highlighted the (desired) lack of inversion of the trend after the post-pandemic increases of 2021. This leads to a situation of “fragile stability”, which can be seen in positive terms, as the main economies have been able to maintain an almost unchanged risk level even in spite of the adverse geopolitical circumstances. Conversely, the lack of improvement can also be seen as a “lost opportunity” for those countries that – despite extensive public or multilateral financial support – have been unable to strengthen their macroeconomic fundamentals, entailing greater exposure to credit risks, for both public and private counterparties.

The main discriminating factor of the changes in risk profiles, although not the only one, is linked to energy and food prices, affected by the Russia-Ukraine conflict (which sees the former reach the maximum risk level mainly due to the effect of international sanctions). The credit risk of importing economies has consequently deteriorated, as they often suffer from structural weaknesses and fragile operating contexts (such as Tunisia, Bangladesh, Kenya), while there has been a positive influence on exporting countries (for example, Gulf States, Malaysia, Brazil). Meanwhile, those countries with a consolidated economic-financial situation and adequate resources to manage any worsening of the global scenario (including India, Vietnam, Mexico and numerous advanced countries) remain stable.

In a global context strongly polarised by geopolitical elements, the update of the political risk indicators reveals on average a deterioration compared to last year, particularly in terms of the political violence component. There has been a worsening in the countries directly involved in the conflict and in the neighbouring areas of Eastern Europe and the CIS, but also in other areas due to the exacerbation of social tensions as a result of the increased cost of living in areas already under great economic pressure: from North Africa (predominantly Tunisia and Egypt) to Asia (Sri Lanka, Pakistan and Bangladesh) and Sub-Saharan Africa (including Nigeria and South Africa), not forgetting Latin America (Colombia, Brazil and, above all, Peru). Underlying these deteriorations there are also longstanding unresolved issues linked to the decline of social welfare, a fundamental element for the stability of socioeconomic systems and a guarantee of their sustainable development.

Extreme natural events linked to climate change, which are becoming increasingly frequent, widespread and sudden, also generate very negative impacts on socioeconomic balances, locally as well as internationally; they are therefore factors being increasingly considered in business risk assessments. Climate risk indicators show a widespread decline: the Asian area is the most exposed and shows the biggest deterioration, with temperatures rising twice as quickly as the global average – together with Africa in its various regional quadrants (from floods in South Africa and Nigeria, and the desertification of the Sahel, to cyclones in Madagascar, Malawi and Mozambique). Extreme critical phenomena affect also the Caribbean and the so-called “Dry Corridor” in Central America. Drought is the origin of the deterioration in the Middle East and North Africa. 

The need to address these problems, in a context affected by the rupture of energy relations between the EU and Russia, has given further momentum to the energy transition process, an essential priority in which to invest so as to strengthen resilience and to build sustainable growth pathways. Italian enterprises can find in SACE (the Italian Export Credit Agency) a partner to support them in their development processes, both in domestic investments – with green guarantees in support of projects linked to the circular economy, sustainable mobility, re-conversion of industrial processes and energy efficiency – and in the foreign markets with the greatest potential.

The energy transition indicators reveal a partial improvement, confirming the irreversibility of a process that has not only “held up” in the face of even the most complex economic and geopolitical global conditions but that also represents the only alternative to the current energy model. Europe and Latin America confirm the maturity of their transition process, with particularly positive trends of the indicators; improvements were also recorded for the United States, China and India, while fossil exporting countries show delays. In particular, the improvement in the energy transition indicators is driven by renewables (more specifically, photovoltaic and wind generation): last year for the first time renewable investments reached the amount invested in fossil fuels.


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