By Wasana Nadeeshani Sellahewa
(Commonwealth) _ The worldwide manufacturing sector is predicted to be negatively impacted by the worsening economic outlook and energy price shocks in 2023, with industries that use a lot of energy and are heavily dependent on investment demand being the most vulnerable. Despite the uncertain future, it is anticipated that supply chain issues will start to improve in 2023, which will help the world’s manufacturing industry. A quicker expansion in investment in digital and industrial automation tools is anticipated to be supported by ongoing production reshoring activities and constrained labor markets.
In 2023, there will likely be turbulence in the global manufacturing sector as the worsening economic outlook, growing geopolitical threats, and volatility in the energy and commodities markets will put pressure on manufacturers’ performances. In 2023, unequal growth is predicted across industries, with the most impacted being those with a high energy intensity or those are heavily dependent on investment demand. Weaker B2B demand and rising energy costs are anticipated to have an influence on output, which will result in slower production value growth in the chemical products, rubber and plastic, and equipment industries globally in 2023. In 2023, it is anticipated that the worldwide transport equipment business would perform poorly due to slower new car sales as a result of the worsening economic situation. Nevertheless, the reviving airline industry and rising defence spending will support the faster growth of the aerospace sector in 2023.
On the other hand, it is predicted that more value-added and less cyclical industries would maintain their pace in 2023. According to forecasts, the hi-tech goods sector will do the best out of all industrial sectors in 2023 because demand for hi-tech products will continue to be supported by investments in digital tools and the transition to green energy. It is also anticipated that B2C-focused manufacturing sectors, such as pharmaceuticals and food and beverage, would see reasonably significant production value growth in 2023, mostly as a result of consistent consumer demand.
The supply chain challenges that have been present for the past two years due to the worldwide pandemic are predicted to eventually subside in 2023. It is anticipated that greater transportation capacity, larger inventory levels, and generally slower demand growth owing to the poorer economic performance in 2023 will all assist rebalance demand and supply and relieve supply chain issues. For instance, the Logistics Managers Index, which monitors inventory levels, warehousing capacity, and transportation, continued to rise in Q3 2022, signaling a reduction in the burden on international supply chains.
In 2023, lower transportation costs and fewer supply chain issues are other anticipated benefits of increased shipping capacity. The capacity of the world’s shipping will increase by over 2.1 million TEUs in 2023, as opposed to about 1.0 million TEUs in both 2021 and 2022, predicts BIMCO, an association of ship owners and shipping agencies. In consequence, increasing shipping capacity will facilitate global trade by putting a price ceiling on sea transportation services.
The speedy recovery of global supply chains is nevertheless threatened by a variety of dangers, like as China’s zero-COVID policy, growing energy prices, and heightened geopolitical concerns. In spite of the current dangers, global supply and transportation networks are nonetheless anticipated to continue improving in 2023.
The estimate for 2023 predicts that businesses will continue to increase their investments in digital technologies despite the worsening economic picture. The Voice of the Industry: Digital survey by Euromonitor International found that over the next five years, about 62% of businesses worldwide intend to increase their cloud computing spending, while 50% intend to spend money on tools for artificial intelligence, the internet of things, and production automation.
One of the factors causing greater investment in digital technologies in the industrial industry is accelerated production reshoring. Following the COVID-19 outbreak, manufacturing corporations intensified their attempts to localize and reshore their output; in 2023, however, escalating geopolitical tensions will act as an additional impetus for this trend. One advocacy group for production reshoring, the Reshoring Initiative, claims that 1,800 businesses.
