opportunities for growth 2023

Opportunities for growth in 2023

Finding the bright spots in an otherwise gloomy forecast

Most economic commentators agree that 2023 promises to be a challenging year for many businesses and, in particular, most Western economies. But this isn’t the whole story. Some industries and markets are bucking the downward trend, presenting opportunities for growth and patches of light on an otherwise dark horizon.

So where are these ‘bright spots’? My colleagues have produced a chart illustrating their 2023 forecast with the year-on-year percentage change for the world’s major markets and industries. Here are some of the headlines that I can draw from the statistics.

Automotive Industry

Automotive stands out as one of the industries most likely to enjoy global year-on-year growth in 2023, although admittedly this will remain fairly modest. Regional growth is predicted to be strongest in Europe, with output expected to grow by 7%, compared to an average of 3.2% worldwide. The sector is likely to be boosted as inventory levels recover, supply disruptions ease and the threat of energy rationing fades. This is particularly true of the Americas where high order backlogs and low inventories are boosting growth.

Despite this fairly positive picture, the Atradius economists note caution with concerns over weaker demand as households face lower disposable incomes over the coming year. Indeed, the outlook for the Automotive Industry in Asia Pacific is less strong. Automotive growth in the region will struggle to reach double digits and we are even likely to see decline in Australia (-1.0%) and Singapore (-2.0%).

automotive brake light

Here are the regional headlines:

Europe

  • Poland and France will see greatest growth with 16.6% and 13.2% respectively
  • Ireland, Germany and the UK are expected to grow by about 9%

 The Americas

  • Automotive output in the Americas is predicted to grow by 2.9%
  • Canada and Mexico should see output growth of about 4.5%. Brazil is expected to accelerate to 4.9%

 Asia

  • Automotive output in China is predicted to grow by 1.1%
  • The UAE and Vietnam should see the greatest year-on-year growth in the sector with 6.0% and 6.8% respectively

Pharmaceuticals Industry

Pharmaceuticals tends to less affected by economic downturns than other more cyclical sectors. That said, the 2023 growth outlook is patchy, with some markets looking brighter than others. In Europe, most markets are impacted by the war in Ukraine and pressures on supply chains for specific raw materials, oil and gas. This may explain negative growth predictions of -5.0% for Germany, although the outlook for Europe as a whole remains solid in the medium term.

Fairly widespread growth (even though this is modest) is predicted for Asia, with only India and Australia showing signs of strain with predictions of -3.0% for both. The Americas largely echoes Asia, with modest growth predicted for Brazil and the USA, with negative growth in the region of -3.0% assigned to Canada and Mexico.

pharmaceutical test tube research

Here are the regional headlines:

Europe

  • Those European countries that saw strong annual growth rates in 2021 and 2022 are likely to remain strong in 2023 (including Italy, the Netherlands, Sweden and Switzerland).
  • Sweden stands out with the greatest growth prediction of 11.4%

The Americas                                                                           

  • The industry outlook for the Americas is strongest in Brazil, which expects year-on-year growth of 2.9%, followed by the USA with 1%
  • The outlook for Canada and Mexico is challenging with -3.1% and -3.8% predicted respectively

Asia

  • Asia’s strongest growth predictions for Pharmaceuticals are in Vietnam, the UAE, South Korea and Indonesia
  • Negative growth is predicted for Australia and India, with China and Singapore holding fairly level

Construction Industry

The 2023 growth outlook for the Construction Industry paints an interesting picture of a world in two halves, divided largely by East versus West. The East is a picture of health with every major market showing signs of growth, ranging from 10.9% in Indonesia to 7.9% in Japan. Even China, which is facing challenges in its housing market, is predicted to grow by 6.9%.

In Europe, the bright spots are confined to Ireland (3.2%), Spain (1.8%) and Turkey (1.2%). The Americas is largely a reflection of the story in Europe, with the sole bright spot to be found in Brazil with predictions of 2.1% growth.

construction cranes silhouettes

Here are the regional headlines:

Europe

  • The markets showing greatest promise of growth in Europe are Ireland, Spain and Turkey
  • Hungary and Poland are the areas facing the greatest challenges to year-on-year growth in the construction industry

 The Americas

  • Brazil is the bright light for growth in the Americas
  • The Canadian construction industry is expected to contract by as much as 6.0%  

 Asia

  • Asia will be the driving force of growth in the construction industry in 2023, with Indonesia, Japan and Vietnam leading the way
  • More modest growth will be seen in Australia and India (2.9% and 3.2% respectively)

Transport Industry

Transport and logistics output in the Asia-Pacific region is expected to grow 7.0% in 2023, compared to 3.8% worldwide. Growth is driven by increased passenger transportation and a continuing rise in e-commerce. The stand-out market in this sector will be India. We expect it will record a substantial rebound in its transportation sector (up 26.5%), following a large and unexpected contraction in H1 of 2022. Japan is also expecting to have a good year. Japan´s transport sector is set to grow 15% this year, as the ending of border restrictions on foreign travellers and reintroduction of visa-free entry will boost activity.

transportation plane and train

Here are the regional headlines:

Europe 

  • The brightest spot for the Transport Sector in Europe is likely to be Ireland, where output growth of 13.3% is predicted.
  • Following Ireland in terms of European bright spots is Turkey, where the Transport sector is expected to enjoy output growth of 5.4%

The Americas   

  • Transport output in the US and Mexico recorded double-digit increases in 2022, and it is expected to continue growing in 2023, although at a slower pace
  • The sector is predicted to contract in Brazil and Canada during 2023, by -1.0 and -1.3% respectively

 Asia 

  • India leads the market with a notable growth prediction of 26.5%
  • All of the major markets in Asia Pacific, both developing and developed, are predicted to see growth in the Transport Industry during 2023

ICT Industry

Every region in the world should see sustained output growth in the ICT industry this coming year. Although year-on-year output growth in Europe is forecast to be only 1.5%, this is against a backdrop of two years of strong growth. Indeed, industry growth is expected in all European markets despite high inflation and economic uncertainty and is anticipated to accelerate again in 2024 by more than 3% for the region as a whole.

ICT output in the Asia-Pacific region is forecast to grow 6.5% in 2023, compared to 3.3% worldwide. India outpaced all major economies over the past decade, benefitting from a from a large, young, tech savvy and relatively cheap workforce. China should see increases of about 7.4%, due to large government support for innovation and corporates in this sector. Emerging economies like Vietnam, Thailand and Indonesia are also bright spots, boosted by supportive government policies and private investment.

it worker with server

Here are the regional headlines:

Europe

  • Europe will enjoy sustained and steady growth during 2023 and will see an acceleration in output growth during 2024
  • Strongest growth will be seen in Ireland (3.8%) and Poland (3.1%)

 The Americas

  • Mexico is the only shadow on the map of global ICT markets. The industry is predicted to contract by -1.8%
  • Strongest regional growth is expected to be seen in the USA where the industry is forecast to grow by a modest 1.4% 

Asia

  • The brightest spot ICT growth in the world is India, which is expected to grow by 19% in 2023
  • Following India as a world-leading bright spot is China, which should see a growth rate of about 7.4%

 

Download the 2023 industry performance chart here

 

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