Will 2023 be better for business globally? The global economy seems to be recovering slowly amid the Ukraine war, the China slowdown issues and the aftermath of the pandemic left its impact. As per the International Monetary Fund (IMF), the global growth forecast is estimated to be at 2.7 per cent, lower than what was estimated earlier. 2023 may feel like a recession, the UN agency underlines in its October outlook, stressing that “more than a third of the global economy will contract this year or next, while the three largest economies—the United States, the European Union, and China—will continue to stall”.
Meanwhile, the Economic Intelligence Unit (EIU) Industry Outlook 2023 further sheds light on all that can be expected the next year. High inflation has forced firms globally to scale back on their forecast. On Friday, Japan was reported to have recorded the highest inflation figures in four decades.
Here are top points from the EIU report:
1) To protect households from effects of high prices, governments in many countries – especially Europe – will be forced to cut down on healthcare and public spending, the outlook predicts.
2) While corporate investments may slow amid rising rates, it says, businesses in commodities sector may benefit from high prices, adding that “some companies (notably in pharmaceuticals, technology and retailing) will take advantage of lower stock-market valuations, bankruptcies and government incentives to snap up strategic assets and position themselves for an eventual upturn”.
3) In 2023, the automotive and tourism sectors may still not have recovered to pre-pandemic levels (2019).
4) However, in the automotive sector, the electric vehicles segment is expected to see a rise in sales. The EV sales are expected to surge by 25 per cent, more than five times to their pre-pandemic levels.
5) Amid all the gloom, three sectors – EV market, online retail sales and tourism – are expected to deliver relatively stronger growth, particularly in Asia and the Middle East.
6) “Global tourism arrivals will rise by 30 per cent in 2023,” the EIU Outlook underlines, “following 60 per cent growth in 2022, but will still not return to pre-pandemic levels”.
7) Investment is also expected to be attracted by innovations from the metaverse to automated vehicles and data analytics. 2023 may not be an easy year, the EIU’s latest report says, but it could be a transformative one.
8) Meanwhile, for retailers, the profit is set to be squeezed with global inflation forecast at 6.4 per cent. Higher costs for raw materials, energy, labour and logistics will be among key challenges.
9) The retailers are expected to protect their bottomline by slashing their labour costs and relying on automation.
10) 2023 will be the second consecutive year for sluggish growth as far as energy consumption is concerned. “With the global economy slowing and energy prices remaining high, total energy consumption across the 69 countries covered by EIU’s Industry service will rise by just 1.3 per cent in 2023,” the report reads.