Seeing 2023 through the Expert's Eyes

Prediction Consensus: What the Experts See Coming in 2023

We are all very interested in what will happen in the future.For risk management and midterm planning, this is of particular importance.A number of different predictions have been made about 2023, some optimistic, some disaster-oriented.

Several reports are compiled in this article and the similarities are determined with the goal of reaching a consensus.In early January 2023, two eye-catching reports were released.

Over 500 articles, reports, podcasts, and interviews were analyzed to create the Global 2023 Predictions Forecast by Visual Capitalist.Global Risks Perception Survey, which collects insights from more than 1,200 experts, was published by the World Economic Forum.Considering these facts, where does the Global Value Chain Barometer stand? How can we maintain an agile strategy for our businesses, our personal finances, and our investments?

First, let's look at the big picture from the Visual Capitalist perspective

Experts can reasonably predict the future one year in advance, but they are also in a position to influence the future by shaping thought and action.As demonstrated by COVID-19 and the Ukraine invasion, there are times when unexpected situations flare up, which can have knock-on effects across the entire system.

The crystal ball is shining brightly. Let's take a look at it.

• The Economic Vibe Check

Over 2023, experts are predicting a few big picture trends.Inflation: Declining as the year progresses. It is unlikely that inflation will fall back down to 2%, the Fed's preferred range.

• GDP: Global economic growth between 1.5% and 2%.

In 2023, analysts believe the U.S.-and perhaps Europe-will narrowly avoid recession.

After 2022's worst bond performance on record, Wall Street experts and other analysts are cautiously optimistic about equities.

AI is Eating the World

There's no doubt that automation is displacing jobs, but with the exponential increase in AI in recent years it feels more existential.

Obviously, there are also positive aspects to this technological advancement. AI-based tools can generate ideas, mock-ups, and even functional code snippets.

There is no doubt that AI will be a major catalyst this year. Big Tech is being forced to innovate faster thanks to AI start-ups, and employees are taking advantage of AI tools to boost their productivity.

Compared to previous years, experts predict AI will have a much more visible and tangible impact on people's lives in 2023.

The China Factor

World economic events are greatly impacted by what happens in China, the world's second largest economy.

The reopening of China will also affect other economies. For example, the resumption of travel will be a boon to destinations favored by Chinese vacationers. Economically, Hong Kong stands to benefit immensely—its GDP could jump upwards of 8% after reopening is complete. A lift could also be experienced by emerging market commodity exporters, but inflation could be boosted as a result.

Energy

In the 2023 budget discussions, I'm not sure if there was still a battle over energy prices. If finance department is pushing and securing energy price cuts based on excel files, you will have problems.

In recent years, energy has been the top-performing sector of the S&P 500, and many experts expect further growth.

Energy is a complex global system, with a lot of unpredictable factors involved. A number of geopolitical risks are likely to impact energy supplies in 2023, including conflict. There will be a continued diversification of Europe's energy imports away from Russia.

The Tech lay-offs is now called “The Elon Playbook”

Already in 2023, layoffs had been rampant, highlighted by Salesforce's 7,000 layoffs, and Amazon's 18,000 reductions-primarily on the corporate side.Considering Elon Musk's influence in the tech industry, many experts believe that his strategy of ruthlessly slashing headcount at Twitter might inspire other tech leaders.In 2023, it is also expected that the whole start-up and investment ecosystem will shift from a hypergrowth mindset to a value-focused mindset.

We'll narrow down our predictions to 2023's risks

The World Economic Forum`s 2023 edition of the Global Risks Report highlights the multiple areas where the world is at a critical inflection point. It is a call to action, to collectively prepare for the next crisis the world may face and, in doing so, shape a pathway to a more stable, resilient world.

Throughout 2023, the world will face risks that are both wholly new and all too familiar. We have seen a return of “older” risks – inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest, geopolitical confrontation, nuclear weapons, which few of this generation's business leaders and policy-makers have experienced.

Cost of living dominates global risks in the next two years while climate action failure dominates the next decade.

Food, fuel and cost crises exacerbate societal vulnerabilities while declining investments in human development erode future resilience.

The rising price of debt

Stagflation on a global scale, combined with historically high levels of public debt, could have vast consequences.

A growing demand-supply gap for natural resources Supply-chain crises of recent years have highlighted the need for resilience in traditional strategic sectors. Reliable and cheap access to the most basic of necessities – food, water and energy – underpins the critical functioning of societies.

Demand for food, water and critical metals and minerals is escalating. 

Conclusion: is preparedness possible? 

Re-building and strengthening global risk preparedness cooperation is the answer. In a complex risks outlook, there must be a better balance between national preparedness and global cooperation. We need to act together, to shape a pathway out of cascading crises and build collective preparedness to the next global shock, whatever form it might take. Leaders must embrace complexity and act on a balanced vision to create a stronger, prosperous shared future.

Global value chains will collectively start to rewire in response to the new supply-constrained paradigm. Current macroeconomic developments make it clear that returning to a pre-COVID-19 “normal” is not in sight. Manufacturers are facing headwinds in the form of double-digit inflation, labour shortages and energy scarcity, along with new regulations that are driving an increasing imperative to reduce waste and emissions.

Manufacturing leaders have started to move:

– From global to globally connected multi-local value chains

– From “doing” digital to “being” digital across end-to-end operations

– From economies of scale to economies of skills

– From regulatory compliance to innovative sustainability

– From cost-driven to customer-value-driven. 

A new global economic mega-cycle has begun that will be characterized by value chain disruptions, resource competition and climate change. 

In view of these changes to supply and demand, a return to pre-COVID “normality” is not in sight. The September issue of the World Economic Forum’s Global Value Chain Barometer – a quarterly news bulletin developed by the World Economic Forum in collaboration with Kearney to monitor the impact of disruptions on global value chains – shows a significant increase in risk events related to all three mega-trends driving global value chain disruption.

– The past year has shown a significant increase in operational disruption, peaking in the wake of the escalation of the Russia-Ukraine conflict.

– Following the 2022/Q1 peak, operational disruption levels have stabilized at a medium level in the past month as manufacturers have been continuously adapting to challenges, showing a downward trend.

– However, high inflation and energy prices remain a challenge. Furthermore, increases in the three megatrends above indicate the next wave of operational disruptions

As leaders change their strategies to respond to the supply-constrained economy, the configuration of global value chains will change. As this reconfiguration of global value chains will impact how manufacturing leaders instill resilience into their global operations, WEF presented transformative strategies and approaches along eight dimensions of the resiliency compass to support manufacturers in this redesign.

There are Five trends that dominate the rewiring of global value chains. The rewiring will bring a new mindset about global value chains and how they operate.

Portfolio excellence

– Radically reduce complexity of product portfolio and innovate on product specifications

– Focus on component commonality within portfolio to allow for substitution

Customer orientation

– Use technology to include customer preferences in product design

– Build demand sensing capabilities to tailor manufacturing schedules to changing preferences

Financial viability

– Quantify and include the value of resilience and sustainability for business cases

– Improve financial stress-testing tools to account for cost differentials in rewiring

Go-to-market versatility

– Build an omnichannel strategy to optimize fulfilment options

– Move value chains closer to key concentrations of customers

Logistics flexibility

– Co-invest with other manufacturers to build jointly used logistics infrastructure

– Build logistics control towers to build end-to-end flexibility

Manufacturing adaptability

– Redesign from a centralized network to multiple smaller, geographically dispersed manufacturing sites

– Explore additive manufacturing for mass customization

Supplier diversity

– Nearshore and diversify the supply base for strategic products

– Implement agile supplier qualification methods

Advanced planning

– Invest in upstream and downstream value chain visibility and make use of the power of data

– Build internal planning and tech expertise through targeted trainings

Above strategies can help manufacturers reshape their value chains in response to the five dominating trends and become better equipped to deal with the new reality. The World Economic Forum in collaboration with Kearney. I am eagerly waiting for the World Economic Forum’s Q1 2023 Global Value Chain Barometer and connect it with the Global trends.

There has been damage to international supply chains, but 2023 may be the year when they start to recover. A successful supply chain in 2023 will utilize connected technology, understand the geopolitical climate, be sustainable, and utilize the best talent.

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