November 2022, global consulting firm FTI Consulting hosted an invitation-only briefing in Singapore that explored the likely trends and challenges in the year ahead. Guest speaker Sumana Rajarethnam, the Economist Intelligence Corporate Network’s Director for Southeast Asia, provided an exclusive outlook for 2023.
Here are some key takeaways from his presentation:
- A slowed global growth of 2.7 per cent in 2022 does not translate to a rebound in 2023. World GDP growth next year is projected at 1.6 per cent - the lowest in 20 years.
- Europe will be in full recession as the energy crisis takes hold. High interest rates will continue in the United States.
- A looming food crisis: Soaring fertiliser prices will exert inflationary pressure on food prices. Russia's invasion of Ukraine has cut global supplies of crucial crops, and the war is expected to last another five years. Climate change will make matters worse.
- Commodity security: With increased food insecurity and higher prices, countries have to get energy from wherever they can and put the brakes on green efforts.
- Most of Southeast Asia's currencies are expected to regain strength - a sense of optimism for the region.
- China's zero-COVID policy is expected to ease but not end in mid-2023, as it is tied to Xi Jinping's "unwavering support". Tourism will remain minimal.
- ESG needs an overhaul as measuring change has been difficult and given rise to exploitative practices. Just focusing on the E in ESG (i.e. carbon) could help.
- China is expected to overtake the US as the world's biggest economic power sometime in 2030 - 2035. Asian economies like Bangladesh and Vietnam are expected to grow and join the G20 of the future, but not all of them will be rich.