Welcome to Onyx Strategic Insights’ first Global Outlook, where you will find our geopolitical and macroeconomic forecasts for the year ahead, alternative scenarios, and long-term considerations. Download it here.

We are a new consulting division of Expeditors, and our core mission is to advise global companies and their executive leaders on strategy through the lens of geopolitics and macroeconomics. Stay tuned for our upcoming 2023 outlooks for key regions and industries.

Our global outlook in a nutshell:

• Global growth will slow in 2023. The effects of COVID-19, supply chain disruptions, and war in Europe will continue to weigh on consumers and businesses. Indeed, global manufacturing and trade are already in recession. We expect sub-4% growth in China (below consensus) as COVID-19 outbreaks cause a bumpier reopening than the “best case” scenario implied by the market.
• As major economies strive to move past the current crisis, global posturing will increase as the US, EU, and China bet on industrial policy for long-term growth in tech, new energy, and biotech.
• Short-term results, however, are constrained by limited budgets. Governments will for now rely on bilateral investment partnerships, sanctions, and trade remedies to achieve political goals.
• US and China seem resilient, but Europe’s risk skews to the downside across alternative geopolitical scenarios on China’s reopening, escalation in Ukraine, and an EU energy crisis. We do not at this point expect tensions around Taiwan to escalate into military action in 2023.

What it means:

• The slowdown will alleviate pressure on supply chains, but this does not mean the end of a high-cost environment. Labor, energy and commodities will remain historically high. In our forecast:
  • Retail sales are held up by slowing consumer demand in the US and Europe
  • Auto improves in 2023 as pressures ease but likely remains below pre-COVID peaks
  • Electronics slows by about half a percent in 2023, and then recovers in 2024-25; and
  • Industrials are a mixed bag with growth in energy and aerospace, but weakness in durable goods
• Moreover, the risk of new sanctions and other remedies is high this year, as governments’ reliance on competition through trade policy increases.

The long run:

• We are at the initial stages of a long transition towards regionalization. Greenfield investment in China already shows signs of decline, but no clear global winner has emerged.
• As the transition takes place, three wildcards will determine the path, pace, and direction of transformation: demographics, technological breakthroughs, and great-power competition. How governments manage this transition will determine their long-term domestic growth prospects and their level of integration into new value chains.