In 2024, international business faces three major challenges: geopolitical instability, trade barriers, and unsettled artificial intelligence. These factors significantly affect the global economy and require strategic adaptation of companies.
Business risks 2024
Main challenges for companies
KPMG International released a report that identified the three most significant threats to global business in 2024 and beyond. These include geopolitical instability, trade barriers, and differences in the regulation of artificial intelligence. For Ukraine, the ongoing war remains an additional factor.
The partner of KPMG in Ukraine emphasizes that business will have to overcome not only tariff increases, government regulation and sanctions, but also to counter cyber threats and adapt to the changes caused by the introduction of AI.
"Today, the world economy is undergoing a transformation in the direction of deglobalization and slobbalization, which involves slowing down international integration and deepening ties instead of expanding them," she said she.
Detailed overview of key risks
- The geopolitical instability of the is characterized by rapid technological development, climate change, and international tension. According to KPMG, in 2023, 91 countries were involved in armed conflicts, which is significantly higher than in 2008 (58 countries). This led to a reduction in world GDP by 12.9%.
- Trade barriers have nearly tripled since 2019, reaching 3,000. This includes protectionist measures to protect local producers , creating barriers to international trade, affecting logistics chains and access to markets.
- Artificial intelligence is becoming a driving force for change in various industries, with investments in this area increasing more than fivefold from 2013 to 2023.
Impact on various sectors of the economy
The greatest impact was experienced by energy industry and natural resources sector. This area also showed the lowest financial performance indicators according to the data of more than 40,000 companies worldwide. The infrastructure sector and financial services ranked second and third in terms of exposure to risks.
Strategies to overcome the challenges
The KPMG report suggests five priority steps for business leaders:
- carry out a comprehensive risk assessment;
- constantly monitor geopolitical events;
- diversify supply chains;
- increase operational stability;
- strengthen communication with stakeholders.
It is worth noting that the recent PMG Pulse of Fintech report for the second half of 2023 indicates a decline in total investment in the fintech sector to a six-year low - $113.7 billion across 4,547 deals, compared to $196.6 billion across 7,515 deals in 2022.
Glossary
- KPMG International is an international network of firms that provides auditing, tax and consulting services
- AI (Artificial Intelligence) - a branch of computer science that is engaged in the creation of intelligent machines
- GDP (Gross Domestic Product) - an economic indicator reflecting the market value of all final goods and services
- Fintech - financial technologies used to provide financial services
- PMG Pulse of Fintech - a regular report on the state and trends in the fintech sector
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Answers to questions
What are the main risks for international business in 2024?
How does geopolitical uncertainty affect the global economy?
What role do trade restrictions play in today's business environment?
What impact does artificial intelligence have on business?
What steps does KPMG recommend to improve business sustainability?
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Discussion of the topic – Top 3 business risks in 2024: geopolitics, trade and AI
KPMG identifies key risks for international business in 2024: geopolitical instability, trade restrictions and unregulated AI. For Ukraine, war is an additional factor.
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Oleksandr
I wonder how these risks will affect Ukrainian business? Looks like we'll have to face all three at once 😱
Maria
Yes, Oleksandr, you are right. But I think that our entrepreneurs have already learned to be flexible. Maybe it will even give us an advantage in the future? 💪
Pierre
Agree with Maria. Ukrainians showed incredible resilience. But I am concerned about AI. Do you think our companies are ready for its implementation? 🤖
Sophia
Pierre, I think many companies are already actively using AI. For example, in the field of customer service or analytics. But it is important to find a balance between innovation and ethics 🧠
Klaus
It's all nonsense. AI, geopolitics... It would be better to think about how to reduce taxes for business. That's where the real problem is! 😤
Oleksandr
Klaus, I understand your dissatisfaction, but ignoring global trends is a path to nowhere. Maybe you should think about how to adapt to the changes? 🤔
Isabella
And I am most concerned about trade restrictions. How will it affect the export of Ukrainian products? Maybe someone knows about some successful cases of overcoming these barriers? 📊
Maria
Isabella, heard about a Ukrainian IT company that opened offices in several EU countries. This helped them bypass some restrictions. Maybe this is one way? 💻🌍