ECIC AR 2024 9TH

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

E Integrated Report 2024 external environment X P O R T C R E D I T I N S U R A N C E C O R P O R A T I O N O F S O U T H A F R I C A S O C L T D Economic and Political Outlook Global Economic Outlook Global economic growth remains desynchronised with economies that have stronger fundamentals recovering more firmly, while those that encountered severe setbacks are struggling to maintain growth. In 2023, the global economy showed more resilience than expected and recorded an estimated

3.2% growth despite multiple shocks arising from monetary policy tightening, rising geopolitical tensions and extreme weather conditions. The global economy remains fragile, with growth forecast to average 3.1% in the next five years. However, risks to the outlook are heavily skewed to the downside and include intensifying global conflicts, technological competitions, prolonged periods of higher interest rates, climate change and weaker Chinese demand.

4,5

4,0

3,5

3,0

2,5

2,0

% Growth

1,5

1,0

0,5

0,0

2022

2023

2024

2025

2026

2027

2028

2029

World Advanced economies

EMDEs

Sub-Saharan Africa

Source: IMF World Economic Outlook, 2024

Figure 8: GDP Growth 2022-2029

The value of global trade is estimated to have declined to US$31 trillion in 2023 from the record breaking US$32 trillion in 2022 as a result of weakened demand, particularly from developed nations and a decline in commodity prices. Trade in goods was the contributor to the contraction, with a decline of approximately US$1.3 trillion in 2023, while services trade recorded an estimated increase of approximately US$500 billion. Agriculture and metal commodities are expected to see a levelling-off in prices in 2024, with declines forecast for 2025, due to lower demand from China. An improvement in energy security prospects, will result in lower oil prices, however,

supply cuts by the Organization for the Petroleum Exporting Countries (OPEC), could make it difficult for a smooth economic recovery. This has implications for most Sub Saharan African (SSA) countries, which are largely dependent on single or few commodities for foreign exchange earnings and fiscal revenue. Lower revenue has an impact on debt-servicing capabilities in most countries, particularly those where ECIC has exposure, and it may result in defaults or restructuring of existing transactions. This also impacts underwriting of new projects, particularly commodity-backed transactions.

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