Risk survey shows business sentiment rocked by war

Our March flash survey was launched a week after Russia began its invasion of Ukraine. Against this backdrop, business sentiment has deteriorated markedly.

Some 84% of businesses have become more negative about global growth prospects over the past month. More than half (55%) report becoming slightly more negative over the past month, with more than a quarter becoming significantly more negative (29%).

This represents the most widespread worsening of sentiment since we first asked this question in 2020, during the first coronavirus wave.

”The latest Oxford Economics Global Risk Survey shows that Russia’s invasion of Ukraine has triggered the most widespread worsening of sentiment since the height of the pandemic,” commented Jamie Thompson, head of Macro Scenarios at Oxford Economics.

Other findings include:

• The war is now cited as the greatest global economic risk.
• Businesses have become much more pessimistic about prospects for global growth in 2022. The mean expectation has fallen 1.3ppts since January – three times the size of the downward revision to our own baseline forecast. Around a quarter of respondents view risks to the global economy as heavily skewed to the downside.
• Businesses have also revised up sharply their expectations for inflation this year, with the mean rising 1.5ppts. Three-fifths of respondents expect supply chain disruption to persist into 2023.
• Respondents appear more concerned about the impact of Russia’s war on the global economy than on their own businesses. While around a half expect the conflict to lower activity slightly in their business in 2022, only 1-in-50 anticipate much lower activity.

The survey was completed by 165 businesses from March 2-11. Participating companies in the analysis collectively employ around six million people and have a turnover of around $2 trillion.