This Markets in a Minute from New York Life Investments shows the world macroeconomic risk map in 2022 against a shifting economic landscape.
When Russia invaded Ukraine, vital grain export routes shut down in Ukraine’s Port of Odesa—causing global food prices to soar.
Since then, energy markets have been disrupted, leading European heating costs to skyrocket. Meanwhile, global inflation is high, and central banks around the world are raising interest rates in response to rising price pressures.
Macroeconomic Risk Map: The Methodology
Macroeconomic risk is an overarching metric that takes into account many external risk factors that could impact investor portfolios and business valuations within a country. These factors include items like monetary policy, trade flows, and the political climate.
In the data from Allianz Trade, a country’s macroeconomic risk is determined based on the following categories:
Economic Risk: Indebtedness, monetary policy, economic structure
Political Risk: Institutional independence, policy effectiveness, power concentration
Structural Business Environment: Ease of doing business, regulatory framework
Commercial Risk: Short-term demand disruption
Financing Risk: Risk of short-term disruptions of accounts receivables
In the context of this data, each calculation for macroeconomic risk level is ultimately a proxy representing the risk of companies not making debt payments within a given country.