Geopolitical Shocks and Climate Change Will Remain Biggest Risks in 2025, Says EIU Report

"Hopes that the world will one day return to normal have been continually dashed since the covid-19 pandemic, and 2025 will be no different," the Economist Intelligence Unit (EIU) says in its Industry outlook 2025 report that explores the challenges, opportunities and trends to watch in the following six industries: energy, financial services, consumer goods and retailing, technology, automotive, and healthcare. The report further says: "Although working and travel patterns are normalizing, the economic and political outlook remains uncertain. EIU forecasts that real GDP will grow by a subdued 2.6% in 2025, similar to 2024 but slower than the average for the ten years before the pandemic." What is more, "The US economy will slow as labor markets tighten, but China's will accelerate slightly, amid stimulus and reviving trade. Those of the EU and Japan will also tick up, but only smaller developing markets such as India will deliver significant growth."

Geopolitical tensions and trade barriers will force more shifts in supply chains, amid subdued business growth. The EIU also presents the following predictions for 2025:

• Inflation is expected to ease, allowing for further monetary easing.
• Prices for agricultural and energy commodities will fall, but those for industrial raw materials will rise.
• Geopolitical risks will persist amid wars in Ukraine and the Middle East, while rising trade barriers between the EU, the US and China will reshape supply chains.
• Climate change will increase geopolitical tensions. National climate pledges will be updated at COP30 in November 2025, but much will depend on US leadership.
• Investment in technology, especially artificial intelligence (AI), will remain strong, but tech companies will face regulatory pressures, investor impatience and scrutiny over energy usage.

According to the EIU, "Falling inflation will allow monetary easing to continue. We expect the Federal Reserve (Fed, the US central bank) to cut interest rates by a further 50 basis points during 2025. We also expect prices for agricultural commodities and industrial raw materials to move in different directions in 2025- 26. Although agricultural prices will continue to trend downwards, prices for industrial raw materials will rise again, particularly for base metals that benefit from the green transition. As for energy commodities, prices will fall on average, but remain at risk from political shocks."

The UK-based company provides the following key global forecasts for each sector covered by its report:

• Energy: Fossil-fuel markets will continue to face geopolitical risks amid conflicts in the Middle East and Ukraine, but investment into renewables will remain strong, particularly in China.
• Financial services: Falling interest rates will weigh on bank profit margins, leading to lower dividend payouts, but the Basel III endgame will be eased or delayed further.
• Consumer goods and retailing: Global retail volumes will expand by 2.2%, helped by disinflation, but regulations around online retailing will tighten further, particularly for high-volume low-price Asian retailers such as Shein and Temu.
• Technology: More countries will start using satellite internet, but use cases will be limited to enterprise clients—military and maritime. Amazon's Kuiper will disrupt the market duopoly of Starlink and EutelSat OneWeb.
• Automotive: After a difficult few years, annual new-vehicle sales will reach a record 97.2m units in 2025. We forecast that sales of new cars will rise by 2%, commercial vehicles by 4% and electric vehicles by 16%.
• Healthcare: Global healthcare spending will outpace inflation, growing by 1.9% in real terms. The World Health Organization will make climate change the focus of its 14th four-year general program, which starts in 2025.

Companies and investors alike should take note that geopolitical shocks and climate change will remain the biggest risks in 2025. The EIU's "baseline forecast assumes that another large-scale war will not break out in Asia or the Middle East. However, the continued threat of geopolitical conflict, in addition to the continuing war in Ukraine, will lead to economic reconfiguration and policy divergence." Moreover, "The EU and the US are already raising barriers against Chinese exports in areas from  automotive and technology to healthcare. Chinese retaliation is likely to intensify in 2025 as rival blocs emerge across the world. These trends," according to the report's authors, "will reshape supply chains over 2025, and could upend our forecast of falling commodity prices and inflation."

Regarding climate change and how efforts to mitigate it will play in these political rifts, the report notes that "At COP30 in November 2025 governments are due to update their national climate pledges (NDCs), but much will depend on US leadership. The debate over environmental, social and governance (ESG) reporting will intensify as regulations enforcing disclosure come into effect in the EU and elsewhere." In addition, "EU climate regulations, due to come into force from 2026, will also have an international impact on trade by forcing multinational companies to monitor their supply chains."

While investment in technology, particularly AI, will be strong as projects gather pace, "technology companies will face pressure from several directions as regulations tighten (particularly in Europe), investors become more impatient for profits and their energy usage comes under more scrutiny." I agree with the EIU that "Companies will need to navigate these new requirements, while also trying to reconfigure their supply chains and seek out areas of growth."

What challenges, opportunities and trends are you watching as we celebrate the beginning of 2025?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

How Geopolitical Tensions, New Technologies, and Environmental Threats Could Upset the Economic Outlook for 2024

Though the Economist Intelligence Unit (EIU) expects modest global growth in 2024, continued monetary tightening, supply chain disruptions and geopolitical conflict could weigh heavily on the global economy next year. In a report that explores how geopolitical tensions, the advent of new technologies and persistent environmental threats could upset the outlook in the coming year, the EIU explains that its "operational risk scenarios evaluate the events that could have a severe impact on its core economic and geopolitical forecasts, challenging the operations of businesses worldwide." For example, "In 2023 resilience among consumers and a gradual fall in inflation reassured uneasy investors and supported modest global growth." The EIU expects "stable, but unspectacular, global growth to continue into 2024 as economic uncertainty recedes and major central banks begin to lower policy rates in the second half of the year. The UK-based organization's report "explores how geopolitical tensions, the advent of new technologies and persistent environmental threats could upset the outlook for 2024."

Below are ten risk scenarios that could reshape the global economy in 2024:

1. Monetary policy tightening extends deep into 2024, leading to a global recession and financial volatility (moderate probability; high impact)
2. A green technology subsidy race becomes a global trade war (moderate probability; high impact)
3. Extreme weather events caused by climate change disrupt global supply chains (high probability; moderate impact)
4. Industrial action spreads, disrupting global productivity (high probability; moderate impact)
5. China moves to annex Taiwan, forcing a sudden global decoupling (low probability; very high impact)
6. A change in the US administration leads to abrupt foreign policy shifts, straining alliances (moderate probability; moderate impact)
7. Stimulus policy failures in China lead to increased state controls and diminished growth prospects (low probability; high impact)
8. The Israel-Hamas war escalates into a regional conflict (very low probability; high impact)
9. Artificial intelligence disrupts elections and undermines trust in political institutions (moderate probability; low impact)
10. The Ukraine-Russia war spirals into a global conflict (very low probability; very high impact)

While business leaders should be mindful of the ten risk scenarios, there are three that I am watching closely. As someone who follows the green technology sector, I have concerns about how a subsidy race could turn into a global trade war. As the EIU explains: "Western economies are rolling out generous incentives for businesses to invest in clean energy technologies by boosting domestic industrial capacity and enabling greater competition with China, which is the leader in the production of many green technologies. These initiatives also aim to accelerate countries’ transition towards achieving net-zero greenhouse gas emissions, but most incentives include strict sourcing requirements for components (notably in the US). These requirements have already spurred tensions between the EU and the US, and will probably raise the cost of inputs and subsequently the green technologies themselves."

The report importantly adds that should "relations with China experience a severe downturn (including in relation to strengthening China-Russia ties or deepening concerns over China's state-driven industrial policy), Western economies could increase existing tariffs on Chinese imports or accelerate decisions on pending investigations into anti-dumping and state subsidy charges, further fueling price growth. China would retaliate, possibly by blocking exports of raw materials that are critical to the green transition agenda such as rare earths, making decarbonization efforts more expensive for developed markets. These costs would force economies to consider returning to carbon-based technologies, limit support from Western countries to fund emerging markets' energy transition and delay timelines for achieving net-zero emissions."

Regarding the spread of industrial action that will lead to the disruption of global productivity, the EIU says: "High global commodity prices, continued supply-chain disruptions, high food prices and continued currency weakness against the US dollar for some countries will continue to fuel discontent in 2024-25." What is more, "Wages have not risen as quickly as inflation in most countries, making it harder for poorer households to purchase basic staples. This could spark social unrest, expanding the small-scale protests and industrial action already seen in Europe, the US, South Korea and Argentina. In an extreme scenario, protests could push workers in major economies and who are employed by large manufacturers to co-ordinate large-scale strikes demanding salary increases that match inflation. Such movements, like those that have affected the automotive industry in the US and key services in the UK (healthcare, ports and railways), could paralyze entire industries or public services for an extended period and spill over to other sectors or countries, weighing on global growth."

As for artificial intelligence disrupting elections and undermining trust in political institutions, the EIU points out that "Global firms and governments have rapidly begun to test and integrate generative artificial intelligence (AI) into existing platforms and processes." Furthermore, the EIU believes "AI will augment (rather than replace) human capabilities, presenting an opportunity for firms to improve productivity. However, the widespread adoption of AI and its use in social media will raise the risk of a spread in disinformation campaigns via text, imagery, audio and video in the coming years. Regulation across different geographies is coming, but malicious actors will still look to implement wide-ranging programs aimed at fueling existing skepticism of some citizens towards governments." The report crucially notes that "This could potentially shift the result of major elections scheduled for 2024—including for the EU parliament, and in the US, the UK, India and Taiwan—and more broadly erode voters' trust in political systems."

The world is facing geopolitical tensions, the advent of new technologies, and persistent environmental threats that could upset the economic outlook for the coming year. Which of the global risk scenarios will you be watching?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Growth Prospects, Risks and Trends in Six Critical Sectors in 2024

The past few years have been turbulent for most companies as the pandemic, soaring commodity prices, high interest rates and political disruption resulted in profits for many and bankruptcy for some. A report published by the Economist Intelligence Unit (EIU) asks: Will conditions stabilize in 2024?

EIU's report provides growth prospects, risks and trends facing six critical sectors in the coming year, as inflation eases but geopolitical tensions remain high. The report argues that the biggest challenge facing businesses next year will be climate change and looks at how experimentation with artificial intelligence will give way to rapid adoption, changing corporate strategies and the nature of work.

Key findings include:

• Climate change will drive demand in sectors relating to mitigation and adaptation. Insurers, companies and governments will struggle to price in the increasing risks.
• EU and US regulations on environmental, social and governance (ESG) reporting will push companies to scrutinize their operations and supply chains. However, skepticism about ESG will harden in the US ahead of November’s presidential elections.
• Corporate concerns over taxation will increase as the OECD introduces its global minimum tax rate and individual governments try to reduce budget deficits and national debt levels.
• Geopolitical tensions and wars will complicate government and corporate responses to all of the above. Investment in supply chains, particularly for technology and the energy transition, will adapt to minimize political risk.
• Generative artificial intelligence will disrupt a few sectors, but most companies will find ways to use AI to increase productivity.

The report also provides key global forecasts for each sector covered:

• Automotive: The automotive industry will face another subdued year in 2024, weighed down by slow consumer spending, high interest rates and disruption to supply chains due to geopolitical tensions. The only bright spot will be the electric vehicles market, with sales expected to soar by 21% to 14.9 million unit as governments and consumers try to mitigate the worsening effects of climate change. The report notes that established carmakers will have to fight hard to hold off competition from China.
• Consumer goods and retail: A slowdown in inflation will bolster retail volume growth by 6.7% in US dollar terms and 2% in volume terms in 2024. However, reduced savings and high food prices, worsened by the effects of climate change, will act as dampeners. The EIU also points out that high food prices will continue to cause problems in Asia.
• Energy: Global energy consumption will grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy will rise by 11%.
• Finance: High interest rates will determine the success or failure of almost every part of the financial services sector in 2024. Though painful for borrowers, banks will enjoy strong net interest margins margins and revenue flows until margins begin to narrow mildly in late 2024. Property firms and funds, however, will suffer.
• Healthcare: Healthcare spending will rise by 2% in real US-dollar terms, following two years of decline, as inflation eases. However, resources will remain constrained as governments try to bring down fiscal deficits and public debt levels.
• Telecoms and technology: Geopolitics will continue to affect technology in 2024. The tech battle between the US and China will persist in areas including artificial intelligence (AI), chips and quantum technologies. AI will continue to develop, particularly generative AI, but will encounter challenges from new regulations in the EU and other major jurisdictions, as well as complications from US-China tensions.

I appreciate how the annual industry outlook provides businesses with foresight of the critical global trends and threats that will affect their sector 2024. Which trends and threats are you watching in the coming year?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Recommendations for Realigning the Global Financial Architecture to Achieve Financial Stability, Boost Productive Investment and Create Better Jobs

"Today, we see setbacks in indicators on poverty, hunger and gender equality, to mention just a few," Rebeca Grynspan, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), wrote in the Forward to The Trade and Development Report 2023: Growth, Debt and Climate – Realigning the Global Financial Architecture. Ms. Grynspan adds that "The

financing gap for the Sustainable Development Goals in the global South – which totaled $2.5 trillion in 2015 – now amounts to $4 trillion. Nearly half of all humanity, or 3.3 billion people, lives in countries that spend more resources on debt servicing than on funding health or education. At this pace, only 15 percent of the Sustainable Development Goals will be achieved by 2030."

Ms. Grynspan points out that UNCTAD's report "identifies three specific global challenges that have crystalized during the year 2023. Weak global growth, divergence between major economies and between developing countries, as well as the increased role of geopolitical factors, indicate that we are witnessing a change in the nature of global interdependence, or a transition from the period of hyperglobalization to one of polyglobalization."

Focusing on how to realign the global financial architecture, the report identifies five core policy priorities:

1. Reducing inequality. This should be made a policy priority in developed and developing countries. This requires concerted increases of real wages and concrete commitments towards comprehensive social protection. Monetary policy is not to be used as the sole tool to alleviate inflationary pressures. With supply-side problems still unaddressed, a policy mix is needed to attain financial sustainability, help lower inequalities and deliver inclusive growth.
2. Balancing the priorities of monetary stability with long-term financial sustainability. In light of growing interdependencies in the global economy, central banks should assume a wider stabilizing function within this landscape.
3. Regulating commodity trading generally, and food trading in particular. This needs to be done internationally, using a systemic approach developed within the framework of the global financial architecture.
4. Addressing the crushing burden of debt servicing and the threat of spreading debt crises. To do this, the rules and practices of the global financial architecture need to be reformed. The mechanisms, principles and institutions of global finance should ensure reliable access to international liquidity and a stable financial environment that promotes investment-led growth. Given the failures of the current architecture to enable the resilience and recovery of developing countries from debt stress, it is crucial to establish a mechanism to resolve sovereign debt workouts. This should be based on the participation of all developing countries and include agreed procedures, incentives and deterrents.
5. Providing reliable access to finance and technology transfer to enable the energy transition. This would require not only fiscal and monetary agreements among the Group of 20, but also agreements within the World Trade Organization (WTO) to implement technology transfer, and within the International Monetary Fund (IMF) and World Bank to ensure dependable financing. Without eliminating the incentives and regulatory conduits that make cross-border speculative investment so profitable, private capital is unlikely to be channeled to measures to help adapt to climate change.

UNCTAD's report also presents the following specific policy recommendations for a development-centered global debt architecture:

• Increase concessional finance through capitalization of multilateral and regional banks, and issuance of special drawing rights.
• Enhance transparency in financing terms and conditions, using the digitalization of loan contracts to improve accuracy.
• Revise the UNCTAD Principles for Responsible Sovereign Lending and Borrowing to motivate and underpin the importance of guiding principles throughout the stages of sovereign debt acquisition.
• Improve debt sustainability analysis and tracking to reflect the achievement of the Sustainable Development Goals and empower country negotiators with improved data on their potential for growth and fiscal consolidation.
• Enable countries to utilize innovative financial instruments such as sustainable development bonds and resilience bonds. Develop rules for automatic restructurings and guarantees.
• Enhance resilience during external crises, for example by implementing standstill rules on debtors' obligations in crises, and create a space to enable the avoidance of debt distress.
• Encourage borrowers to share information and experiences, drawing inspiration from private creditor coordination.
• Initiate work on a more robust debt workout mechanism and a global debt authority.

With the global economy at a crossroads where divergent growth paths, widening inequalities, growing market concentration and mounting debt burdens cast shadows on the future, I appreciate how the report "outlines an approach based on balancing the pace of disinflation and the impact of high real interest rates not only against inflation indicators, but also in relation to economic activity, employment, income inequality and fiscal stability."

What are your recommendations for how to get the global economy moving in the right direction by using a balanced policy mix of fiscal, monetary and supply-side measures to achieve financial stability, boost productive investment and create better jobs?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

How Africa Can Strengthen Supply Chain Diversification in High-Knowledge- and Technology-Intensive Sectors

"The global supply chain disruptions caused by recent crises, such as the 2008–2009 global financial and economic crisis, the COVID-19 pandemic, the war in Ukraine and the resulting global market slowdown, have intensified the need to promote resilience by diversifying supply chain operations across various countries and regions," The United Nations Conference on Trade and Development (UNCTAD), the trade and development body of the United Nations, says in a report that provides a unique insight into the potential for increased integration into the supply chains in Africa by bringing together knowledge on how Africa can strengthen supply chain diversification in high-knowledge- and technology-intensive sectors.

Entitled The Economic Development in Africa Report 2023: The Potential of Africa to Capture Technology-intensive Global Supply Chains, the UNCTAD's report says "The risks of concentrating manufacturing and supply chains in a few markets and of sourcing and supplying sector-specific intermediate goods from a few locations can increase exposure to shocks and disruptions in production networks and supply chains. By diversifying or relocating to Africa, supply chain participating companies can source some of the inputs (raw materials and intermediate goods) from the continent, while reducing the costs of transportation and logistics and minimizing risks of supplier delivery delays and other challenges. These disruptions and opportunities for supply chain diversification or relocation come at a time when African economies are growing more sustainably."

Moreover on the topic of turning disruption into opportunity, the report explains that "In recent years, global supply chains have come under immense pressure as a result of unprecedented trade turbulence, economic uncertainty, geopolitical events and natural disasters. Consequently, these supply chains were severely disrupted. This has led key players, such as the series of manufacturers, distributors, consigners and so on involved in producing goods of a particular kind and bringing them to market, to re-examine ways to strengthen supply chain resilience. Although the integration of African economies into supply chains is relatively low compared with other regions, disruptions to supply chain operations have a more than proportionate adverse impact on their economies."

UNCTAD also points out that "African consumer markets are increasingly transitioning towards middle- and low- middle-income status with an appetite for more sophisticated goods and services. Moreover, the need for supply chain diversification emerges at a time when Governments in Africa and regional institutions have reinforced their commitments to push forward their regional integration, diversification and industrialization agendas, which are viable strategies for developing industrial capabilities and creating prosperity on the continent."

The aforementioned global trends and pressures have given many economies and businesses pause for thought; they are now rethinking strategies for recovery, renewal, and resilience. Many multinational companies are looking into how they can reduce their dependence on a single supplier and diversify their supply chains to build resilience to current and future global turbulence. Others have explored a more regionalized approach with greater security, allowing firms to source and produce within their home countries and regions. While some of these evolving scenarios may have far-reaching implications for investment and fixed cost – and some companies may not be able to pay the cost – their potential benefits and impacts far outweigh the cost. This is particularly so for supply chains and industries that are highly exposed to geo-physical events, trade disputes and other global stresses.

I appreciate how the report "focuses on the high-knowledge and technology-intensive industries – automotives, electronics, green energy technology and medical devices – that are vulnerable to global supply chain disruptions, partly due to their extensive geographic footprint." I also concur that "Opportunities for diversification of high-value and technology-intensive supply chains can strengthen resilience, foster the participation of technology-enabled enterprises in supply chains and optimize the participation of Africa in global supply chains."

What are your recommendations for how Africa can strengthen supply chain diversification in high-knowledge- and technology-intensive sectors?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Financing International Transactions and 12 Steps to Exporting Success

While researching material for the previous post on this forum about a publication produced by the Export-Import Bank of the United States (EXIM) that helps empower American small businesses to succeed in global markets, I discovered an infographic that presents three ways to finance international transactions:

Option 1: Traditional Transaction

Exporter sells to buyer and arranges for either cash-in-advance (the safe choice) or open account credit terms, which is an effective sales tool but one that carries some risk.

Option 2: Transaction with a Factor

The Factor buys invoices from the exporter at a fee and pays the exporter immediately. The foreign buyer is instructed to pay the Factor by the due date on the invoice.

• Step one: Exporter contracts with Factor
• Step two: Exporter ships to foreign buyer
• Step three: Factor pays exporter upon shipment
• Step four: Foreign buyer pays Factor for goods by invoice due date

Pros of this transaction include the elimination of risk of nonpayment by foreign buyer, payment to the exporter is fast, generally fewer than 10 days, and it maximizes cash flow. More costly than export credit insurance and generally applicable for sales with terms of fewer than 90 days are two of the key risks of transaction with a Factor.

Option 3: Export Credit Insurance

The exporter wins sale to foreign buyer by offering open account credit terms. The Exporter uses an Export Credit Insurance (ECI) policy to insure the receivables against nonpayment by the foreign buyer.

With ECI, receivables are covered up to 95% of the invoice amount. Costing pennies on the dollar, ECI is a more affordable. This post that I published in this forum provides a thorough overview of ECI.

Trade Finance Guide

Exporters may also find value in the Trade Finance Guide: A Quick Reference for U.S. Exporters, which is produced by the U.S. Department of Commerce's (DoC) International Trade Administration (ITA) that explains the basics of trade finance so that U.S. companies can evaluate appropriate financing options to ensure they get paid for their sales.

Export Solutions Guide

In addition, trade professionals at the U.S. Commercial Service, part of the ITA, produced the Export Solutions Guide: 12 Steps to Exporting Success, which was developed to assist American exporters create successful international sales strategies. The twelve steps include:

1. Learn How to Export
2. Research Foreign Markets
3. Network and Learn at Events
4. Find Buyers and Partners
5. Explore eCommerce Resources
6. Obtain Financing
7. Negotiate an Export Sale
8. Navigate Shipping and Logistics
9. Comply with U.S. and Foreign  Regulations Regulations
10. Perform Due Diligence
11. Protect Intellectual Property
12. Resolve Export Problems

Which resources do you find useful in financing international transactions or achieving exporting success?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Empowering American Small Businesses to Succeed in Global Markets

While I am proud of my three decades of doing business in all corners of the world, I always appreciate the opportunity to learn more about how to seize the opportunities and mitigate the risks of global business. Therefore, it was with great interest to learn about a document produced by the Export-Import Bank of the United States (EXIM), an independent government agency that assists in financing and facilitating U.S. exports of goods and services, that helps empower American small businesses to succeed in global markets.

The document begins with presenting the services provided by the U.S. Export Assistance Centers (USEACs) as one-stop shops that equip American businesses to compete on a global scale. Specifically, USEACs bring multiple exporting resources together in one convenient location. These centers are situated throughout the country to offer support directly to businesses currently exporting or thinking about exporting. USEAC offices are staffed with three of the federal agencies engaged in assisting export businesses: (1) the U.S. Department of Commerce (DoC), (2) the U.S. Small Business Administration (SBA), and (3) EXIM.

The DoC helps business owners learn how to export, connect with foreign buyers, and expand operations in new foreign markets. The SBA supports small businesses that are exporting or interested in learning more about exporting. Moreover, with the help of its partners, the SBA provides counseling and training, helps businesses find buyers with the State Trade Expansion Program, and has loan guarantee programs available specifically for exporters. One way that EXIM assists companies is by providing Export Credit Insurance. An Export Credit Insurance policy covers the accounts receivable generated by international sales, protecting your company against nonpayment by foreign buyers. The insurance policy mitigates risk while empowering companies to meet or beat their competitors. Business owners can use open account credit terms to win new customers and increase sales to existing buyers. Many posts on entrepreneurship in this forum provide additional details about some of the programs offered by these government agencies.

Addressing financing tools from EXIM, the document notes that running a small business comes with risks but getting paid does not need to be one of them. EXIM's Export Credit Insurance empowers business owners to grow sales while mitigating the risk of selling internationally. Using Export Credit Insurance empowers businesses to offer open account credit terms to compete more aggressively, protect their foreign receivables from nonpayment, expand their borrowing base and improve cash flow.

EXIM's Working Capital Loan Guarantee provides exporters with access to the cash needed to fulfill sales and take on new business abroad. Exporters can use a working capital loan to cover the costs of labor, materials, overhead, and supplies required to fulfill a foreign sale. A business can use their Working Capital to pay for materials, equipment, supplies, labor, and other expenses to fulfill export orders, post standby letters of credit serving as bid bonds, performance bonds, or payment guarantees, and purchase products for export.

The document correctly notes that "Locating new buyers overseas can be time consuming, expensive, and frustrating." It points out that the DoC is available to help by matching American exporters with foreign buyers. There are two programs that can businesses can utilize to grow their operations overseas:

DoC's Gold Key Matching Service arranges meetings with interested partners in international markets. The Gold Key team first identifies foreign buyers, assesses them, and provides profiles of the best matches. When it comes time for a meeting with a matching foreign company a member of the Gold Key team can accompany business owners and managers and provide support.

Through the Single Company Promotion, the DoC can organize a variety of promotional events to increase awareness of a company's products and services in a specific international market. These promotional events may include targeted email campaigns, seminars, webinars, direct mail campaigns, and receptions all designed to reach an audience of potential clients. The DoC handles all the logistics, project management, and provides a post-promotion review to discuss next steps.

While not mentioned in the document, it is worth mentioning Export.gov, which is managed by the DoC and International Trade Administration to assist businesses plan their international sales strategies and succeed in today's global marketplace.

Regarding the Small Business Administration, the SBA Learning Center gives businesses access to courses on all of these topics and more:

• Planning and strategy to develop an international business plan
• Legal and regulatory to help you navigate regulations and legal issues
• Documentation and product requirements
• Pricing development and strategy
• Marketing and social media 

The SBA also works with lenders to guarantee loans in support of international trade. These include the  Export Express Loan, the International Trade Loan, and the Export Working Capital Loan. The SBA also has a grant program called the State Trade Expansion Program (STEP) that provides funding to state and territory governments. These STEP funds are exclusively available to help small businesses with export development.

I possess extensive experience working with these three government agencies and can attest to the value each one provides for businesses looking to succeed in global markets. Feel free to contact me if I can be of service to you.

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Calls for Urgent Support to Developing Countries to Attract Massive Investment in Clean Energy

In its 2023 edition of the World Investment Report, the United Nations Conference on Trade and Development (UNCTAD)  called for urgent support to developing countries to enable them to attract significantly more investment for their transition to clean energy. Through this report, the Swiss-based agency of the United Nations, which promotes inclusive and sustainable development through trade, investment, finance, and technology, shows that much of the growth in international investment in renewable energy, which has nearly tripled since the adoption of the Paris Agreement in 2015, has been concentrated in developed countries.

In writing the report's Preface, António Guterres, Secretary-General of the United Nations, explains that the report "has an important role in the biggest battle of our lifetime: keeping temperature increases below the agreed limit of 1.5°C. By monitoring global, regional and national investment trends and developments, this report supports policymakers by showing where investment is on track, and where more is needed. The report's recommendations are an important guide to boosting climate finance and investment in developing countries – one of the most important factors in combating the climate crisis."

The report presents three key messages:

Global FDI retreats, but new project announcements show bright spots

"Global foreign direct investment (FDI) declined by 12 percent in 2022, to $1.3 trillion. The decline was mainly a result of lower volumes of financial flows and transactions in developed countries. Real investment trends were more positive, with growth in new investment project announcements in most regions and sectors. FDI in developing countries increased marginally, although growth was concentrated in a few large emerging economies. Inflows in many smaller developing countries were stagnant, and FDI to the least developed countries (LDCs) declined."

The report also notes that "Industry trends showed increasing project numbers in infrastructure and industries that face supply chain restructuring pressures, including the electronics, automotive and machinery industries. Three of the five largest investment projects were announced in semiconductors, in response to global chip shortages. Investment in digital economy sectors slowed after the boom in 2020 and 2021."

In addition, "Investment project numbers in energy remained stable, allaying, for now, fears of a reversal of the downward trend in fossil fuel investment due to the energy crisis. Oil majors are gradually selling fossil fuel assets to private equity firms and smaller operators with lower disclosure requirements, which calls for new dealmaking models to ensure responsible asset management."

The SDG investment gap widens despite the growth of sustainable finance

"International investment in sectors relevant for the Sustainable Development Goals (SDGs) in developing countries increased in 2022. Infrastructure, energy, water and sanitation, agrifood systems, health and education all saw increased project numbers. However, compared to 2015 when the SDGs were adopted, progress is modest."

Moreover, "A review of investment needs at the midpoint of the 2030 Agenda for Sustainable Development shows that the investment gap across all SDG sectors has increased from $2.5 trillion in 2015 to more than $4 trillion per year today. The largest gaps are in energy, water and transport infrastructure. The increase is the result of both underinvestment and additional needs."

The report also explains that "The growing SDG investment gap in developing countries contrasts with positive sustainability trends in global capital markets. The value of the sustainable finance market reached $5.8 trillion in 2022. Sustainable funds had positive net inflows while traditional funds experienced net outflows. Sustainable bond issuance also continues; it has grown five-fold over the past five years. Key priorities for the market are increasing exposure to developing countries and addressing greenwashing concerns."

Developing countries need vastly more support to attract energy investment

The report points out that "International investment in renewable energy has nearly tripled since the adoption of the Paris Agreement in 2015. However, much of this growth has been concentrated in developed countries." What is more, "More than 30 developing countries have not yet registered a single utility-sized international investment project in renewables. The cost of capital is a key barrier for energy investment in developing countries. Bringing in international investors in partnership with the public sector and multilateral financial institutions significantly reduces the cost of capital."

The report also importantly says "Most developing countries have set targets for the energy transition in nationally determined contributions. Only about one third of them have translated those targets into investment requirements, and few have developed the asset specifications that are needed to design targeted promotion mechanisms and to market bankable projects. As a result, many developing countries use generic fiscal and financial incentive mechanisms that are less effective for the promotion of energy transition investment."

Lastly on the topic of developing countries needing more support to attract energy investments, I strongly support UNCTAD's assertion that "De-risking support to lower the cost of capital for energy transition investment in developing countries must be vastly expanded. More technical assistance should be available for investment planning and project preparation. International investment agreements need accelerated reform to expand policy space for climate action and to strengthen investment promotion and facilitation provisions." Through this report, the Swiss-based agency of the United Nations, which promotes inclusive and sustainable development through trade, investment, finance, and technology, puts forward a Global Action Compac for Investment in Sustainable Energy for All with recommendations for national and international investment policies, global and regional partnerships, financing mechanisms and capital market involvement.

Writing the Forward, Rebeca Grynspan, Secretary-General of UNCTAD, insightfully notes that "Armed with the data and insights this report offers, it is imperative that stakeholders approach investment with a strategic mindset. The complexities and disparities highlighted demand astute decision-making, as the road ahead is fraught with challenges. Together we must navigate this landscape with resolve and intelligence, shaping a more sustainable and equitable world for generations to come."

What are your recommendations for developing countries can attract investment to bolster their clean energy sector?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Challenges, Opportunities and Trends to Watch in Seven Sectors in 2023

"The continuing pandemic, the war in Ukraine and high inflation have forced many companies to scale back their forecasts" in 2022, the Economist Intelligence Unit (EIU) notes. Will 2023 will be any better?

The 12th edition of the EIU's annual report forecasts growth and key risks in seven business sectors for 2023, as the war in Ukraine pushes up commodity prices and the cost of living. The report argues that the war has disrupted the recovery from the covid-19 pandemic, and businesses now face increased risks as economies slow or tip into recession, particularly in Europe.

The EIU's report also provides key global forecasts for each of the seven industries:

• Global sales of new vehicles will be flat in 2023, but sales of electric vehicles will rise by 25% to 10.7m units.
• In 2023 retail growth volumes will be respectable at 4.9% in US-dollar terms, which will mainly reflect high inflation. In real terms, global sales will slow or fall in most markets.
• Global energy consumption will rise by just 1.3% as the global economy slows. The energy crisis will force some countries to increase their use of coal or rethink plans to phase out nuclear power.
• Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers. Formerly fast-growing fintech companies will be hit by the capital-market crunch.
• Global healthcare spending will rise by 4.9% year on year in US-dollar terms, which will mask falling investment in real terms, as countries struggle to cope with continued demand.
• The metaverse will not become a mass-market in 2023, but this will not stop heavy investment into this technology. The drive to standardization and the battle with web3 will be at the forefront.
• International tourism arrivals will rise by 30% as China slowly loosens its covid-19 restrictions. This will follow 60% growth in 2022, but will still leave total arrivals below 2019 levels.

The EIU also presents the following key forecasts for each industry:

Automotive outlook 2023: Bright spots amid stalling growth

• 
  The automotive industry will remain vulnerable to global headwinds in 2023 including the energy crisis, slower global demand and continued supply-chain problems.
• Global new-vehicles sales will remain flat in 2023: new-car sales will rise by 0.9% and new commercial vehicle (CV) sales will fall by 1.3%.
• Sales of electric vehicles (EVs) will be the only bright spot, growing by 25%, but governments will restructure their incentive schemes.
• Governments' focus will turn to charging networks, which are inadequate to meet the expanding EV fleet.
• Autonomous vehicles will take a leap forward, as UN regulators lift their speed limit.

Consumer goods and retail outlook 2023: Retailers respond to pricing pressures

• 
  Inflation will push up global retail sales by a robust 5% in US-dollar terms in 2023, but the lower volume of sales and surging costs will weaken retailers' profits.
• The rollout of automation technologies will offer opportunities to limit wage growth, which means that retail employment is unlikely to return to 2019 levels.
• Online sales growth will slow, but the online share of retail will edge up to about 14% of global retail sales.
• Inflation-wary consumers will prefer to shop at discount stores, helping these retailers to increase their market shares.
• The economic slowdown in China, caused in part by its zero-covid strategy, will mean fresh challenges for global luxury brands already affected by the loss of Chinese tourists.

Energy outlook 2023: Surviving the energy crisis

• 
  Global energy consumption will grow by only 1.3% in 2023 amid a slowing economy.
• Despite decarbonization targets, coal consumption will grow marginally to compensate for gaps in gas supplies.
• More extreme weather events will force many countries to fall back on fossil fuels, delaying the energy transition.
• Renewable energy consumption will surge by about 11%, with Asia leading the way, but investment will weaken.
• The energy crisis will prompt some governments to backtrack on efforts to phase out the use of nuclear power.

Finance outlook 2023: A new test for financial stability

• 
  Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers in 2023 than in the past two years.
• The impact will be particularly acute in North America and Europe, where governments will offer support. The environment will be tough in Asia as well, although policy rates will rise by less.
• Heavily indebted developing countries will find it harder to refinance foreign debt, driving some to default or require rescues to avoid it. However, the International Monetary Fund will continue its lenient treatment of economies requiring its financing programs.
• The current capital-market crunch will hobble a wide variety of loss-making fintech challengers that sought to outflank incumbents in banking, payments and other activities.

Healthcare outlook 2023: The aftermath of the pandemic

• 
  Healthcare spending will fall in 2023 in real terms, given high inflation and slow economic growth, forcing difficult decisions on how to provide care.
• Digitalization of the healthcare system will continue, but the use of health data will come under stricter regulation in the US, Europe and China.
• Patent cliffs for key drugs and measures to control pharmaceutical pricing in the US, India and elsewhere will force some major pharma companies to spur growth through deals.
• Supply-chain disruptions will continue to push up drugmakers' costs, despite investment in more localized pharmaceutical production.

Technology and telecoms outlook 2023: The battle for digital supremacy

• 
  The metaverse will not become mass-market in 2023, but this will not stop heavy investment in the technology. The drive to standardization and the battle with web3 will be at the forefront.
• Artificial intelligence (AI) will continue to develop, after several breakthroughs in 2022, but will encounter challenges from new regulations in key jurisdictions.
• Semiconductors will continue to be a geopolitical tool between the US and China, involving many other countries. Some companies producing the most advanced products and equipment will benefit.
• Asian telecommunications companies will continue to look for consolidation in 2023. Mobile markets with four or more mobile network operators, such as Sri Lanka, Japan and India, are the most likely to secure deals.

Tourism outlook 2023: Turbulence in the travel industry

• 
  Global tourism arrivals will rise by 30% in 2023, following 60% growth in 2022, but they will still not return to pre-pandemic levels.
• The economic downturn, sanctions on Russia and, above all, China’s zero-covid strategy will be among the factors weighing on the industry.
• Hotels, restaurants and airports will struggle to cope with labor shortages, wage demands, and high food and energy prices.
• Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand.
• The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

Useful for companies developing their global business strategy for the coming year, the report presents the following macroeconomic key points:

• The war in Ukraine, combined with lockdowns in China, has exacerbated supply-chain disruptions and pushed up global inflation, forcing EIU to downgrade its forecasts for economic growth in 2023.
• Many governments, particularly in Europe, will be forced to scale back investment in public services, including healthcare, in order to protect households and businesses from the effects of higher prices.
• While some businesses (particularly in commodities sectors) will benefit from high prices, many will be hit by weak demand and high input costs, particularly for energy.
• Profitability will be squeezed, while corporate investment will slow amid rising interest rates.
• However, some companies (notably in pharmaceuticals, technology and retailing) will take advantage of lower stock-market valuations, bankruptcies and government incentives to snap up strategic assets and position themselves for an eventual upturn.

"Amid all this gloom," the EIU encouragingly says "there will be areas of opportunity." Taking the EV market as an example, "online retail sales and tourism will continue to deliver strong growth, particularly in Asia and the Middle East," the report notes. "Innovations—from the metaverse to automated vehicles and data analytics (notably in healthcare)—will attract investment, with some companies also seizing on chances offered by volatile financial markets." I concur that "It will not be an easy year, but it could be a transformative one."

Lastly, The Economist produced a video that looks into which stories may be worth watching in the coming year.

What will you be watching in 2023?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

A Guide to Help American Exporters Navigate Trade Finance

For many exporters in the United States, understanding the intricacies of trade finance is often a challenging undertaking. Encouragingly, the International Trade Administration (ITA), a U.S government agency whose mission is to create prosperity by strengthening the international competitiveness of U.S. industry, promoting trade and investment, and ensuring fair trade and compliance with trade laws and agreements, created The Trade Finance Guide: A Quick Reference for U.S. Exporters.

The guide defines trade finance as "a set of techniques or financial instruments used to mitigate the risks inherent in international trade to ensure payment to exporters while assuring the delivery of goods and services to importers. In other words, trade finance is a means to turn cross-border trade opportunities into real transactions by effectively managing the competing risks as well as the inherent risks facing both exporters and importers." The guide importantly adds: "The WTO estimates that trade finance plays a key role in facilitating and supporting as much as 80 to 90 percent of international trade. However, the availability of trade finance and the risk of non-payment are among the most often cited obstacles by U.S. SMEs considering selling in global markets."

The ITA says its Trade Finance Guide "explains the basics of trade finance so that U.S. companies, especially small- and medium-sized enterprises (SMEs), can evaluate appropriate financing options to help ensure they get paid for their export sales." What is more, exporters "will also find information on how digitalization is helping to transform trade finance, with the prospect of increasing access, streamlining processes, and reducing costs."

The guide is designed to help exporters answer the following questions:

1. Is your business looking to make that first export sale or expand into more markets, but needs clarity on financing options and methods?
2. Did you know that having open account terms may help win customers in competitive markets?
3. Is insisting on cash-in-advance always a good idea?
4. What are the advantages of exporting on consignment?
5. What should you know about export working capital financing or export credit insurance?

Segmented in 17 chapters including "Access to Capital for Startups in Global Markets, "Methods of Payment in International Trade," "Export Working Capital Financing and Government Guarantees," and "Export Credit Insurance," the guide provides introductions to each of the three U.S. government finance agencies (Export-Import Bank of the United States' Office of Small Business; U.S. Small Business Administration's Office of International Trade; and U.S. Department of Agriculture's Foreign Agricultural Service's Credit Programs Division) in their respective chapters and have updated other chapters, as appropriate, in collaboration with experts from relevant fields. The ITA will be continuously updating the online Trade Finance Guide on an as-needed basis, with a revised PDF version available for download on an annual basis.

While myriad of opportunities exist for U.S. exporters, they also face major types of risks including:

• Country risk is the risk of exposure to financial loss caused by political, economic, and social conditions and events in a foreign country.
• Commercial risk is the risk of non- and delayed payment caused by the importer’s insolvency or cash-flow problems.
• Foreign exchange risk is the risk of exposure to financial loss due to the fluctuation of an exchange rate change when trading with countries that have a different currency.
• Cultural influences are an additional risk factor that can negatively affect all aspects of international business.

And as an advisor to many American exporters, I appreciate the following tips for exporters:

• Be mindful of emerging trends that could reduce the complexity, cost, and processing time of trade finance transactions.
• Inquire with your current trade finance provider about available or planned digital options that could enhance efficiency and reduce costs.
• Explore trade finance options, including consulting new fintech-based trade finance providers about both traditional instruments and innovative offerings.
• Be cautious of potential fraud and cyber security risks that may accompany new technologies and online trade finance platforms.

In presenting the benefits of exporting, the guide notes:

The United States is the world's second largest exporter, with $2.5 trillion in goods and services exports in 2021, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. However, less than one percent of America's 32 million companies export; and of those do, about 60 percent sell to just one or two markets—Canada and Mexico, for example. And SMEs, which account for 98 percent of the nearly 280,000 American exporters, are even less likely to export to more than one market. With 95 percent of the world's consumers living outside of the United States, beginning to export-- or expanding to additional export markets—can help SMEs expand their sales, diversify their portfolios, and insulate them against periods of slower growth in the domestic economy.

What tips do you have on financing new export sales?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Explores How Political and Economic Developments Will Shape Africa's Mining Sector

"Rich in natural resources, the African continent has attracted a large inflow of investment in recent years," says the Economist Intelligence Unit (EIU) in a report that explores how political and economic developments will shape the future of the mining sector in Africa and their key implications on prospective projects in the region. The report adds that "Although extraction of Africa's reserves has been largely hindered by weak domestic governance structures and policy impediments, the continent is set to remain one of the major supplier of a number of commodities in the coming years."

Focusing on four key themes: (1) the upside and downside of risks caused by elevated commodity prices, (2) how sanctions against Russia will affect mining activities in the region, (3) the effects of exploration activities and prospective project development in the region, and (4) and the future of mining in Africa, the report's key findings include:

• Sanctions against Russia—which have largely been more severe than initially expected—will disrupt Russian mining activities in Sub‑Saharan Africa, without having a serious negative impact on domestic mining sectors themselves.
• African economies will face manageable downside risks, which are markedly outweighed by the risks to the upside that stem from steep commodity price growth. This is due mainly to the insignificance of Russian exports for African economies.
• As sanctions become increasingly severe, the EIU expects that Russian miners will struggle to finance current and prospective operations, and may ultimately be forced to sell their concessions for reduced amounts.
• Russia's mining activities in Africa have been growing in recent years, and are increasingly concentrated in weakly governed and authoritarian states. We expect this to continue as the West continues to exclude Russia from the global economy.
• Although higher prices will benefit current production and operations, inflation will disrupt exploration activities and prospective projects. High energy costs, coupled with heightened global risk and uncertainty, will add to the costs of project development.

The EIU explains that "The African continent is home to substantial reserves of copper and cobalt (in the Democratic Republic of the Congo—DRC—Zambia, South Africa and Zimbabwe), diamonds (in Botswana and Angola), platinum (in South Africa and Zimbabwe), uranium (in Namibia, Niger and South Africa), gold (in Ghana, South Africa and Sudan), iron (in South Africa), manganese (in South Africa, Gabon and Ghana), bauxite (in Guinea), lithium (in Zimbabwe), coal (in South Africa and Mozambique), natural gas (in Algeria, Egypt and Nigeria) and petroleum (in Nigeria, Angola, Algeria and Libya)." Moreover, "Africa contains about 12% of total global oil reserves, 12% of natural gas reserves, more than 80% of platinum group metals and more than 40% of the world's gold. Extraction of Africa's reserves has been largely hindered by weak domestic governance structures and policy impediments, alongside the high risk of investments in Africa and low commodity prices during 2016‑20. This has resulted in a notable shortage of exploration activity in the African mining sector."

The report, however, encouragingly points out that "many African commodity exporters—Zambia and Namibia in particular—have initiated procedures to create a business-friendly environment in order to attract investments into their domestic mining sectors. Elevated commodity prices are fueling an export boom across Africa." What is more, "High prices for copper, oil, iron ore, aluminum and gas will stoke investments and are all helping to reduce external imbalances, stabilize currencies and boost economic growth. However, downside risks abound. The continent depends on energy imports (as net crude exporters have insufficient refinery capacity), and the war in Ukraine is set to stoke strong inflationary pressures."

With respect to the impact of Russia's unprovoked invasion of Ukraine on African economies, the EIU notes: "Total African exports to Russia add up to only about US$5bn, with imports totaling about US$14bn. Total trade between the regions is small, at about US$20bn, and trade disruptions resulting from the Russia-Ukraine conflict will not seriously affect African economies. However, it will affect certain African industries, such as cocoa and tobacco, and textiles and clothing." The EIU expects "the clothing industry in Tunisia, in particular, to be hit by negative impact. The tobacco industries in Nigeria, Tanzania and Mozambique will also be affected by the conflict."

Lastly, the EIU is forecasting "that Africa's mining sector traders will not be heavily affected by loss of Russian exports or activity. The total amount of exports to Russia is relatively small, and the growth in commodity prices will outweigh any marginal loss to total exports." The report importantly notes that "alternative export partners, China in particular, will take up the excess output. Given the strong demand for global commodities, the small amount of lost Russian exports will quickly be taken up by alternative buyers. In countries such as Sudan, Mali and the CAR, discrete Russian mining operations are likely to continue, circumventing sanctions."

What political and economic developments do you think will shape Africa's mining sector?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

2022 Will (Hopefully) Be a Year of Recovery and Renewal for Economies and Businesses Affected by Covid-19

"2021 was supposed to be a year of recovery for economies and businesses that had been affected by the coronavirus (Covid-19) pandemic," according to The Economist Intelligence Unit's annual report that examines the opportunities and challenges ahead for seven sectors of the global economy: automotive; consumer goods and retailing; energy; financial services; healthcare and pharmaceuticals; technology and telecoms; and tourism. "However, it has not been a straightforward rebound. Although coronavirus vaccines allowed many countries to ease lockdowns and begin a recovery, cases remained stubbornly high, albeit with an improved recovery rate. International borders remained either shut or subject to cumbersome testing requirements. One knock-on effect was supply-chain disruptions that hampered companies' ability to meet consumer demand, pushing up prices. Many of these problems will persist into 2022."

Businesses operating in these seven sectors should note that "[g]rowth prospects for all these sectors in 2022 will depend on their respective base levels. Some sectors—notably, telecoms and pharmaceuticals—thrived during the pandemic, but will need to navigate evolving consumer demands, as well as increased competition and regulation going forwards. Some sectors—notably, automotive and tourism—suffered slumps and will struggle to deal with the aftermath. For the remainder, the situation and outlook remain mixed, with companies pushing against headwinds to reach areas of opportunity."

The report presents the following key forecasts:

• Supply-chain disruption will make it harder for manufacturers and retailers to meet recovering demand, dampening sales forecasts for both consumer goods and automotive.
• High prices will push up interest rates, which could raise bad debt levels and dampen demand. However, some consumer companies and banks will turn higher prices to their advantage.
• New technologies - both digital and non-digital - will offer new opportunities, but will also attract more attention from regulators keen to ensure a level playing field. Health apps will be among those affected.
• Companies will need to prepare for changes in tax regulation, following a global deal to set a minimum corporate tax rate. Although this legislation may be derailed, efforts to collect taxes are increasing.
• Amid efforts to combat climate change, companies will come under more pressure to cut emissions and meet more standardized reporting requirements. This will affect their investment strategies, particularly in the oil and coal sectors.

In addition, below are the key forecasts as they relate to each of the aforementioned seven sectors of the global economy:

Automotive in 2022: back to near-normal

• Global sales of new vehicles will rise by 7.5% in 2022, taking them back past 2019 levels. The recovery will be led by Asia and North America.
• Many vehicle makers will still struggle to meet recovering demand amid continuing supply-chain disruptions.
• Global sales of new electric vehicles (EVs) will continue to soar, rising by 51%. New emissions rules will force carmakers to make far-reaching decisions about their fossil-fuel models.

Consumer goods in 2022: knots in the supply chain

• Global retail sales will recover to 2019 levels in volume terms, but coronavirus (Covid-19) cases, inflationary pressures and slow job growth will pose challenges.
• Online shopping will grow at a slower pace in 2022 as lockdowns lift, but will still account for 17% of global retail sales.
• Higher supply-chain costs will motivate businesses to wean consumers off discount schemes and focus on higher-margin premium products.

Energy in 2022: transition time

• Global energy consumption will rise by 2.2% as economies recover from the impact of the pandemic. All types of energy, apart from nuclear power, will benefit.
• Energy prices will stay firmer than in recent years, as demand recovers and supply bottlenecks continue to disrupt power generation.
• Many energy companies will need to undertake an urgent review of their strategies in 2022, as governments and investors ramp up pressure to cut emissions.

Finance in 2022: gusty tailwinds

• Economic recovery and rising interest rates will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels.
• Developing markets will take longer to regain their appeal than developed ones. Regulatory uncertainties in China will throw up challenges in the world’s fastest-growing market for financial services.
• Green finance will move towards center stage, as companies and investors try to live up to pledges made at the COP26 climate summit.

Healthcare in 2022: the aftermath of coronavirus

• Global healthcare spending growth will slow to 4.1%, despite rising costs, as governments start to assess the economic damage wreaked by the pandemic.
• Vaccinating the world against Covid-19 (coronavirus) will remain a core priority. However, healthcare systems will also need to start tackling a backlog of non-coronavirus care.
• Healthcare is not exempt from supply-chain problems, and governments will push ahead with regulation designed to increase resilience and lower costs.

Technology and telecoms in 2022: geopolitical tensions

• Of 60 major telecoms markets, 16 will launch 5G services in 2022 (see map below), but challenges in spectrum availability and pricing will cause delays.
• Technology and politics will continue to be interlinked. The semiconductor shortage will persist, making onshoring of chip production a strategic priority for countries.
• Governments will tighten regulations to boost cyber security, which will be the main short-term risk to digitalization progress, but discrepancies between countries will often dilute the impact.

Tourism in 2022: a shaky recovery

• International arrivals will recover some ground but fail to return to 2019 levels, with business travel likely to remain depressed.
• Differing levels of border control and variations in vaccine passports will continue to make international travel difficult in 2022, although domestic tourism will fill some gaps.
• Compliance with climate-change regulations, as well as higher fuel prices and wages, will increase air-travel costs in 2022. This will eventually lead to airline mergers, airport closures and higher ticket prices.

Lastly, with respect to its macroeconomic forecast, The EIU asserts that "the global economic recovery will continue in 2022, with real GDP expanding by 4.1% at market exchange rates, after rebounding by an estimated 5.4% in 2021. Of the G20 countries, China and Turkey were the only two not to shrink in 2020 and will continue to post firm growth. Eight more, led by the US, have already regained their 2019 GDP levels in real terms, following a strong rebound. The remaining ten, including EU countries and Japan, will regain pre-pandemic levels in 2022, having lost two years of growth."

The report, however, points out that the "recovery could still be derailed if the pandemic flares up again. Persistent supply-chain disruptions could keep commodity prices elevated. This will benefit commodity-dependent countries, but will fuel inflation. That, in turn, will lead to tightening monetary policy, with impacts on stock markets, banks, companies and governments. Geopolitics will remain fraught too: the EIU sees an escalation in US-China tensions as the biggest global risk."

Twelve months ago as my colleagues and prepared to close-out 2020, we anticipated 2021 would be a year of recovery and renewal. While some sectors such as technology and pharmaceuticals have seen a healthy rebound, the automotive and tourism sectors struggled during the past year. And the consumer goods, energy, finance, and healthcare sectors had a mixed year as they seek out new areas of opportunity. In the coming year, we will be watching the global vaccination rate, the rise of any potential variants of covid-19, and how governments respond to new outbreaks. We will also monitor how governments and central banks continue their efforts to stimulate economic growth while curtailing inflationary pressure.

What will you be watching in 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.