Time to build up the fortress, not expand the realm

With the world projected to grow at a slower pace over the next year, and the real prospect of trade wars, the level of positive outlook for growth from C-suite is surprising. I see reason for cautious optimism, but uber optimism should be avoided, especially considering the shift in geopolitics, supply chains, very high company valuations and very high debt levels fuelling meagre growth. 

Business leaders must not be blind to the risks, which are significant, and need to continue to build resilience, predominantly through their supply chain and by shoring up debt obligations. 

Geopolitical fragmentation will threaten supply chains and, in response, business leaders should consider limiting the breadth as a protective measure. Those operating internationally or looking to expand must scale and duplicate supply chains appropriately across borders. It’s better to slim these to a few key countries and share production across those countries. It doesn’t matter if you produce goods or services, it’s the same thing and even if it costs more, it may very well be worth it. 

In terms of macroeconomic indicators, leaders should be focusing on credit spreads and sovereign yields. People need to understand and prepare for the consequences of a potential debt crisis. It’s up to CFOs to make sure that companies are shored up from fluctuations in interest rates and yields. 

Deregulation of the finance system will be the key to unlocking growth for businesses and generate more healthy competition in the market. The debate on reducing regulation will continue and will be the game changer that could influence the overall geopolitical challenges and outlook for 2025.