ARTICLE
13 January 2023

The Big Picture For Business 2023

GW
Gowling WLG

Contributor

Gowling WLG is an international law firm built on the belief that the best way to serve clients is to be in tune with their world, aligned with their opportunity and ambitious for their success. Our 1,400+ legal professionals and support teams apply in-depth sector expertise to understand and support our clients’ businesses.
2022 was another important pivot point for the global economy.
Worldwide Corporate/Commercial Law

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.

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