INTRODUCTION

2022 was another important pivot point for the global economy. The post-pandemic recovery is now facing significant headwinds with war in Europe amplifying global inflation, supply shocks and prompting a sharp rise in interest rates and cost of capital. Our Big Picture For Business 2023 looks at five macro trends shaping the outlook, the global growth map and a 'playbook for uncertainty' for businesses to thrive in the year ahead.

In summary:

  • Global GDP growth is expected to slow to 2.7% in 2023 - following 3.2% growth in 2022 and 6% in 2021.
  • Growth will vary significantly across different nations and regions - with India, the ASEAN region and the Gulf States particularly well placed. The UK and Germany (and potentially the US) are likely to fall into (mild) recession.
  • The Russia-Ukraine conflict will remain the most serious flashpoint for economic and market uncertainty - with low expectations for a peaceful resolution during 2023.
  • Inflation should ease during 2023 but is expected to remain elevated above central banks' 2% target - with interest rates peaking at 4-5% in mid-2023 and unlikely to fall until 2024.
  • A more stable interest rates outlook should re-charge market and investor confidence - with significant 'dry powder' investment capital available to be deployed in 2023.

Key issues for business will include:

- Supply chain risk reviews - reflecting shifting geopolitical risks and lessons learned during the COVID-19 pandemic.
- Inventory management - and risks of over-supply.
- Talent, resource and pay issues - including carefully judged 2023 pay reviews given business cost pressures and (some) easing of inflation.
- Energy consumption - as this becomes a key business cost item.
- Property usage - including effective hybrid working support.
- Re-financing or re-structuring - in a higher interest rate environment.
- Pricing and product positioning - as cost-of-living and cost-of-business pressures drive 2023 buying decisions.
- Strategic moves for long-term competitive advantage - whether in opportunistic M&A or positioning the business to take advantage of mega-trends such as tech and ESG.

The Big Picture For Business 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.