Allianz Trade Global Survey 2023: Testing resilience

  • In our 2023 Allianz Trade Global Survey, we decided to check the pulse of companies in seven countries – the US, the UK, Germany, France, Italy, Spain and Poland. Over three weeks to mid-April, we surveyed a sample of high-level executives in around 3,000 companies that have export activities and suppliers and production sites located in foreign countries.
  • Exporters remain cautiously optimistic. Roughly 70% of corporates expect business turnover generated through exports to increase in 2023 (against close to 80% in the 2022 edition and 94% before the start of the war in Ukraine). One in two exporters sees a moderate turnover increase, between +2% and +5%, down from the double-digit turnover growth registered in 2022. This compares with our latest global trade growth forecasts for 2023: +0.7% in volume terms and -0.1% in value terms. Companies in the countries most affected by the energy crisis are the least optimistic, with Germany, Poland and Italy being the most pessimistic.
  • Companies have a smaller appetite for new markets, favoring a consolidation of existing ones. 63% of corporates favor increasing investment in countries where they are already present and 56% plan to gain further market share in those markets. Only 47% plan to invest in new countries, with US firms being the least outward looking. The recession in global trade of goods that began last October has dragged on corporates’ optimism, and prospects remain weak going forward.
  • Cash remains king for export financing although payment terms are back in the top three sources of export financing. With interest rates on the rise, our survey also finds that a lack of or expensive financing is expected to have significant impact for at least one-third of firms, with US and Spanish firms being most concerned. Interestingly, beyond traditional sources of financing, companies are increasingly turning to Buy Now, Pay Later schemes to finance their exports. For companies in the UK and France, this is cited as the third source of financing after cash and bank loans.
  • 40% of exporters fear a rise in non-payment risk in 2023. Compared to last year, more respondents expect the length of export payment terms to increase (42% vs. 31%), with the share this year reaching levels close to 50% in both the US and the UK. The share of respondents expecting an uptick in export non-payment risk has also increased compared to our early 2022 survey, rising +11pps to 40% overall. The increase is widespread across countries but especially visible in the UK and Germany (both +16pps), while it increased only by +6pps in Italy.
  • Supply-chain-related challenges and risks remain top of mind but financial constraints are starting to show. When asked about challenges and risks, respondents across our sample most frequently (nearly 75%) rated transportation risk and costs as having a moderate to significant impact on export activity in 2023.
  • What is at the top of exporters’ wish lists when it comes to government support?  Upskilling and a pause on regulation. Companies are using less direct state support, but nearly half of respondents cited financing support (e.g. from Export Credit Agencies, development banks, state guaranteed loans, grants) as their preferred form of support to boost international development, constant compared to last year’s survey. Corporates in the US, Spain and Poland stood out compared to the overall average. Next on the list are active labor policies for labor upskilling (47% of corporates, +3pps more compared to last year), especially for corporates in Germany, France, Italy and Spain, followed by lower barriers to trade and regulation (39% of total corporates), especially for corporates in Poland and France.
  • Nothing seems likely to budge significantly global supply chains. Even though Covid-19 and the energy crisis quite significantly disrupted their activities, and despite their acknowledgement of growing ESG and political risks, companies have not majorly overhauled their supply chains. Only 25% did so post-Covid and most do not plan to do so because of the energy crisis. Only about 20% are considering changing location or suppliers to mitigate ESG and political risks.
  • Digitalization and slight adjustments to locations and targets are the most likely resilience strategies. Highly digitized companies experience less impact from shocks and are more agile to cope with them as they are proactively mitigating supply-chain disruptions, demonstrating the compelling case for digital transformation in an era rife with uncertainty and disruption. Corporates with a strong foothold in their respective regions will maintain it, while firms with larger footprints might look for new opportunities around the world. Corporates based in Western Europe favor Western Europe first, while US-based firms favour the US first. In contrast, firms with locations in APAC are open to considering Latam and Africa for future locations.
  • To tackle ESG, corporates favor low-hanging fruit and business continuity for now. While over 75% of respondents state they are knowledgeable about the ESG spend in their firms, despite the current context, 80% would still prioritize business continuity over ESG commitments in 2023. However, business continuity and ESG aren't mutually exclusive, as demonstrated by the 85% of respondents spurred towards a long-term energy transition, probably boosted in their intentions by the recent energy crisis. Companies are also turning to more substantial, structural shifts, such as tying executive compensation to ESG performance, paring back 'brown' activities and fostering sustainable or innovative products and services.
Jasmin Gröschl
Allianz SE