At the start of 2023, against the backdrop of rather gloomy economic forecasts, we looked for ‘bright spots’ in the global economy.
We analysed the major sectors across Europe, Asia and The Americas to see where the opportunities are for the current year.
In Europe, the reality of a protracted Russian invasion of Ukraine sinks in and the outlook for the Eurozone is looking bleak. The Eurozone is relatively exposed because of its proximity to the war and high reliance on imported fossil fuels. Despite this, some bright spots still exist in the automotive, ICT and pharmaceuticals sectors.
Automotive sector – Europe
- Automotive output in Europe to grow 7% in 2023, compared to 3.2% worldwide.
- France ahead of the pack at 13%, while Germany and UK expected to grow by more than 9%.
- As inventory levels recover, supply disruptions ease and the threat of energy rationing fades – the sector will be boosted.
- But concerns remain over weaker demand, as households face lower disposable incomes.
ICT sector – Europe
- ICT continues to grow in Europe in 2023.
- Although a year-on-year output growth is only 1.5% - this is against a backdrop of two years of strong growth.
- Growth is expected in all European markets despite high inflation and economic uncertainty.
- We forecast ICT growth will accelerate again in 2024, by more than 3%.
Pharmaceuticals sector – Europe
- Strong pharmaceuticals sector growth in certain European markets – Italy, The Netherlands, Sweden and Switzerland.
- This comes on top of strong annual growth rates in 2021 and 2022.
- As essential goods - pharmaceuticals are less affected by the current economic downturn than other more cyclical sectors.
- Europe ́s well-established manufacturing facilities, supply chains and production standards promise solid growth in the medium term.
In The Americas, the overall picture is also gloomy with a mild recession predicted in the US in early 2023 as surging prices and interest rates choke domestic demand. This will inevitably impact their closest neighbours in the region. The bright spots are fewer, but still the outlook for the automotive and transport sectors is not all bad.
Automotive sector – The Americas
- Automotive output in the Americas to grow 2.9% in 2023, on par with global sector growth.
- High order backlogs and low inventories are boosting growth.
- But low consumer confidence and high inflation create caution.
- Canada and Mexico expecting output growth of about 4.5%, and Brazil to accelerate to 4.9% in 2023.
Transport sector – The Americas
- Transport output in the US and Mexico recorded double-digit increases in 2022, and we expect it to continue growing in 2023, although at a lower pace.
- US transport sector facing a mild recession in H1 of 2022, followed by a strong rebound in the second half of the year.
- The new Infrastructure Bill will support the industry, stimulating demand for transport and logistics services in 2023 and beyond.
In Asia the picture is brighter. We expect growth to continue decelerating as global demand weakens, but the outlook is still positive. In terms of growth sectors, the construction, ICT, food and transport industries all have strong growth forecasts.
Construction sector – Asia
- Construction output in the Asia-Pacific region to grow 6.4% in 2023 compared to 1.9% worldwide, as emerging economies are driving growth.
- Main driver in the region is the civil engineering subsector, as governments are investing in projects to improve infrastructure.
- Construction output in Indonesia and Vietnam is set to increase 11% and 7.5% respectively.
- Chinese authorities will continue to push ahead with infrastructure investment to offset the struggling real estate sector leading to 7% growth in construction output this year.
ICT sector – Asia
- ICT output in the Asia-Pacific region to grow 6.5% in 2023, compared to 3.3% worldwide.
- India outpaced all major economies over the past decade, and will grow 19% in 2023, benefitting from a from a large, young, tech savvy and relatively cheap workforce.
- China to increase 7.4%, due to large government support for innovation and corporates in this sector.
- Emerging economies like Vietnam, Thailand and Indonesia boosted by supportive government policies and private investment.
Food sector – Asia
- Food output in the Asia-Pacific region to grow 4.0% in 2023, compared to 1.2% worldwide.
- China will record the highest growth rate in the region at 6.5%. The recent easing of COVID related restrictions will encourage higher consumption.
- Across emerging markets in the region, a rising middle class are substituting low value-added staples with higher value-added food goods.
Transport sector – Asia
- Transport and logistics output in the Asia-Pacific region to grow 7.0% in 2023, compared to 3.8% worldwide.
- Growth is driven by increased passenger transportation and continuing rise in e-commerce.
- We expect that India will record a substantial rebound in its transportation sector (up 26.5%), following a large and unexpected contraction in H1 of 2022.
- 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.
To find out what’s in store for your sector, download our full analysis: