An economic slowdown, inflation, supply chain issues, recession threat – what will 2023 bring? Atradius experts make economic predictions on the year ahead.
Senior Economist, Theo Smid, predicts inflation will gradually ease in the U.S. and Eurozone. “We will likely see energy prices remain elevated, as they are now, particularly in Europe. But the contribution of energy inflation to headline inflation should start to wear off as energy processes stabilize. Moreover, supply chain pressures are easing, which will also contribute to lower inflation.”
Senior Underwriting Manager, Luca Colombo, warns of an economic slowdown in 2023, especially in South America. “With Lula taking over the presidency in Brazil, we believe he will pursue less market-focused policies. We will also see higher social spending and more state interventions during his tenure. Lula is facing the challenge of rebuilding fiscal credibility to strengthen business and investor sentiment, domestically and abroad.”
Economist, Dana Bodnar, predicts that 2023 will be a tough year for the oil industry. “With tight global oil supply and the geopolitical uncertainty surrounding Russia’s war with Ukraine, oil price volatility is all but guaranteed, despite the slowdown in demand. The price of oil will remain elevated, we expect it to be above U.S. Dollar per barrel Brent. We don’t predict this to be enough to offset the higher input prices and labor shortages plaguing the industry as it doubles down on reducing debt and increasing shareholder returns.”
Regional Head of Collections, James Berry, predicts a recession for 2023, however, the severity may vary. “Interest rates continue to rise and 2023 may be challenging with rough seas ahead. The theme for this year should be ‘proceed with caution.’ Be prepared for uncertain times and protect your business as best you can.”
Senior Manager, Special Products, Jon Handen, expects to see continued activity in the utilization of trade finance offerings from traditional lenders and non-bank financial institutions, even with the potential challenges looming in 2023. “A key factor centers around the surge in commodity prices, which requires more access to working capital for corporations. Also, we anticipate stakeholders seeking more creative solutions, including longer tenors, which brings higher interest rates. We also expect to see increased interest in those contracts that are aligned with ESG principles.”
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For more on our economic predictions and how global events impact the economy, stay connected with our Atradius blog as we continue to expand on economic reports, current events, and how accounts receivable insurance can reduce the impact from bankruptcies and payment defaults.