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 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%).
Here are the regional headlines:
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.
Here are the regional headlines:
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.
Here are the regional headlines:
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.
Here are the regional headlines:
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.
Here are the regional headlines:
Download the 2023 industry performance chart here