IMF lifts 2023 growth forecast on China reopening, strength in U.S.
People walk along a busy shopping street, during the traditional Boxing Day sales in London, Britain, December 26, 2022. REUTERS/Maja Smiejkowska/File Photo
SINGAPORE/WASHINGTON, Jan 31 (Reuters) – The International Monetary Fund on Tuesday raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.
The IMF said global growth would still fall to 2.9% in 2023 from 3.4% in 2022, but its latest World Economic Outlook forecasts mark an improvement over an October prediction of 2.7% growth this year with warnings that the world could easily tip into recession.
For 2024, the IMF said global growth would accelerate slightly to 3.1%, but this is a tenth of a percentage point below the October forecast as the full impact of steeper central bank interest rate hikes slows demand.
IMF chief economist Pierre-Olivier Gourinchas said recession risks had subsided and central banks are making progress in controlling inflation, but more work was needed to curb prices and new disruptions could come from further escalation of the war in Ukraine and China’s battle against COVID-19.
“We have to sort of be prepared to expect the unexpected, but it could well represent a turning point, with growth bottoming out and then inflation declining,” Gourinchas told reporters of the 2023 outlook.
In its 2023 GDP forecasts, the IMF said it now expected U.S. GDP growth of 1.4%, up from 1.0% predicted in October and following 2.0% growth in 2022. It cited stronger-than-expected consumption and investment in the third quarter of 2022, a robust labor market and strong consumer balance sheets.
It said the euro zone had made similar gains, with 2023 growth for the bloc now forecast at 0.7%, versus 0.5% in the October outlook, following 3.5% growth in 2022. The IMF said Europe had adapted to higher energy costs more quickly than expected, and an easing of energy prices had helped the region.
Britain was the only major advanced economy the IMF predicted to be in recession this year, with a 0.6% fall in GDP as households struggle with rising living costs, including for energy and mortgages.
The IMF revised China’s growth outlook sharply higher for 2023, to 5.2% from 4.4% in the October forecast after “zero-COVID” lockdown policies in 2022 slashed China’s growth rate to 3.0% – a pace below the global average for the first time in more than 40 years. But the boost from renewed mobility for Chinese people will be short-lived.
The Fund added that China’s growth will “fall to 4.5% in 2024 before settling at below 4% over the medium term amid declining business dynamism and slow progress on structural reforms.”
At the same time, India’s outlook remains robust, with unchanged forecasts for a dip in 2023 growth to 6.1% but a rebound to 6.8% in 2024, matching its 2022 performance.
Gourinchas said together, the two Asian powerhouse economies will supply over 50% of global growth in 2023.
He acknowledged that China’s reopening would put some upward pressure on commodity prices, but “on balance, I think we view the reopening of China as a benefit to the global economy” as it will help ease production bottlenecks that have worsened inflation and by creating more demand from Chinese households.
Even with China’s reopening, the IMF is predicting that oil prices will fall in both 2023 and 2024 due to lower global growth compared to 2022.
The IMF said there were both upside and downside risks to the outlook with built-up savings creating the possibility of sustained demand growth, particularly for tourism, and an easing of labor market pressures in some advanced economies helping to cool inflation, lessening the need for aggressive rate hikes.
But it enumerated more and larger downside risks, including more widespread COVID-19 outbreaks in China and a worsening of the country’s real estate turmoil.
An escalation of the war in Ukraine could further spike energy and food prices, as would a cold winter next year as Europe struggles to refill gas storage and competes with China for liquefied natural gas supplies, the Fund said.
Although headline inflation has come down in many countries, a premature easing of financial conditions leaves markets vulnerable to sudden repricings if core inflation readings fail to come down.
Gourinchas said core inflation may have peaked in some countries such as the United States, but central banks need to stay vigilant and be more certain that inflation is on a downward path, particularly in countries where real interest rates remain low, such as in Europe.
“So we’re just saying, look, bring monetary policy slightly above neutral at the very least and hold it there. And then assess what’s going on with price dynamics and how the economy is responding, and there will be plenty of time to adjust course, so that we avoid having overtightening,” Gourinchas said.
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Switzerland’s UBS Group AG on Tuesday reported a 23% increase in fourth-quarter profit, beating analyst estimates, helped by a fall in costs despite a drop in financial markets.
The World Bank said on Tuesday it has approved a $600 million loan to support the Philippines’ economic recovery and efforts to make its financial sector more resilient.
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Justice Department Investigation TikTok Owner for Spying on U.S. Journalists: Reports
The company admitted in December that some of its employees improperly accessed the data of U.S. journalists in a bid to uncover the source of leaks.
The Justice Department and the FBI are investigating the parent company of the popular social media app TikTok for surveilling American citizens, including journalists.
According to reports, federal authorities began their investigation late last year, after TikTok owner ByteDance Ltd. acknowledged that some of its employees improperly accessed journalists’ location data and other private data. Forbes was the first to report the investigations.
The investigation comes amid scrutiny of the app and a hardening policy stance by a bipartisan group of lawmakers and the White House over concerns that China is using the app to gather data on American citizens and influence elections.
ByteDance is based in China and has ties to the Chinese government. The app is banned from federal government devices, government devices in more than two dozen states and those in several European countries.
The FBI and the Justice Department are part of an agency called the Committee on Foreign Investment in the United States, which has asked ByteDance to divest from the U.S. arm of the app – or face a potential nationwide ban, which the White House has signaled it might support.
Former President Donald Trump in 2020 issued an executive order that effectively forced the company to divest of its U.S.-held assets, drawing on emergency economic powers. Despite several reports that a sale was imminent, no agreement was reached. The order did not survive legal challenges in federal court and was ultimately revoked by President Joe Biden.
The latest request has come amid ongoing negotiations between the company and the government over its ownership and the storage of data belonging to Americans. ByteDance has previously proposed another plan whereby the data from U.S. users would be stored in the U.S. and managed by a U.S.-based team.
ByteDance said in December that the employees who accessed the journalist’s data did so in a bid to uncover the source of leaks. Those employees have been fired, it said.
Federal prosecutors in Virginia are also investigating ByteDance, according to reports. TikTok Chief Executive Shou Zi Chew is scheduled to testify in front of the House Energy and Commerce Committee next week.
Dating back to the first vending machine developed in London in the early 1880s to sell postage stamps, autonomous shopping has had a long history.
In 2018, there were an estimated 350 stores in the world offering a fully autonomous checkout process — and this is expected to grow further with 10k autonomous stores anticipated by 2024.
But since then, consumer preferences have shifted: There’s an increased demand for personalisation, on-demand delivery, sustainable consumer choices and the growth of AI.
So how have autonomous stores been affected by these new market trends — and is the sector still on track to hit 10k stores in 2024? Sifted sat down with the experts to find out.
An increased demand for personalisation
Scaling personalisation has been shown to be one of the key retail trends of 2023. Consumers respond well to personalisation throughout the shopping process — from sales and marketing to upselling and after-sales support.
Brands are increasingly relying on consumer data, algorithms and online surveys to fulfil this growing demand for customised products.
For Natasha Thakkar, head of marketing at AiFi, an AI-powered platform that helps retailers scale autonomous shopping solutions, the boom in AI presents the perfect opportunity for it to be used more widely in enabling personalisation in autonomous shopping.
“AI analyses consumer purchase patterns, previous transactions, interests, demographics and other relevant data to help suggest personalised recommendations to the consumer,” she says. “This increases the likelihood of them making a purchase and interacting with the brand more frequently.
Paweł Grabowski, head of unmanned solutions at Żabka Future, a unit of Żabka Group that fosters innovation and finds businesses increasing the value of the convenience store chain, says that autonomous stores (Żabka Nano) allow them to deliver a personalised experience in the offline world. It now operates over 50 stores, making Żabka Nano the largest chain of autonomous stores in Europe.
“It’s like ecommerce shopping, but within brick and mortar — we can collect customer data and track the customer journey at all the stages, which allows us to build advanced analytics, including sales funnel or advanced shopping history based on events.
“The data, combined with our mobile app, enable us to personalise communication, offer and even discount coupons to the customers,” he says.
On-demand delivery and flexible lifestyles
The pandemic drove up the demand for quick online shopping — also known as quick commerce or qcommerce. But now, there’s a shift back to offline shopping and consumers are increasingly opting for a hybrid approach — a mix of online and offline shopping.
40% of consumers who intend to increase in-store shopping and decrease online shopping say it’s because delivery costs are too high.
The experts say that a hybrid approach is the way to go for all brands.
“Both autonomous stores and quick online shopping educate people on how to do grocery shopping differently. We believe in the synergy between those business models,” Grabowski says. “Customers are expecting a complete ecosystem of convenience solutions. Qcommerce is based on dark stores located in good city spots. What if autonomous technology can extend their role to them? Dark stores can then serve both as warehouses and come-and-grab stores for the local community.”
Emanuel de Bellis, associate professor and director of the Institute of Behavioral Science and Technology at the University in St. Gallen, Switzerland, says that he sees autonomous technology working better for quick shopping in local stores. De Bellis’s research focuses on how consumers perceive and use new technologies.
“I don’t see a future with larger stores that are fully autonomous because I don’t really see the incremental benefit — the technology works better for smaller local stores where you can just grab a couple of things,” he says.
Additionally, autonomous stores also give brands the flexibility to operate within settings which were traditionally considered unusual for stores. The ATX Market at Q2 Stadium in Austin, Texas, recently became the first soccer stadium in the world to introduce a checkout-free store.
“Our stores are located in the middle of the offices, dormitories, gyms and inside other stores,” Grabowski adds. “Autonomous stores can provide convenience services in locations where traditional retailers are unable to operate.”
Sustainable consumer choices
Given inflation and the downturn, this may be the right time for brands to leverage technology to improve their offerings and come up with innovative ways for consumers to shop and save.
“Since there’s no checkout staff operating autonomous stores, retailers can operate them 24/7,” says Thakkar. “This not only provides more convenience to the customers, but also helps in increasing the revenue and significantly decreasing operating costs, thereby increasing overall store efficiency.”
Consumers are also increasingly shifting towards conscious shopping habits — buying decisions revolving around ethics, environmentalism and sustainability, regardless of macroeconomic conditions. A 2023 survey shows that 78% of consumers prioritise sustainability.
Grabowski says that at Żabka Group, the business and ESG strategies are interlinked. For example, the stores use only energy from renewable sources.
“Since there’s no checkout staff operating autonomous stores, retailers can operate them 24/7″
“Another crucial element is reducing food wastage: our store is data-driven, so for example, we can accurately predict the demand for fresh products,” he says.
De Bellis says that this also points towards a possible future where human intervention for grocery shopping can be completely eliminated — homes and retailers would be interconnected to predict the items and quantities that need to be purchased and replaced.
“With large amounts of data, it could check what’s in your fridge, for instance, or it could also be connected to many more things such as your blood glucose level and order specific things depending on how healthy you are,” he adds.
“It’s something that we can expect only in the distant future, but are slowly moving towards.”
Why Do Your Customers Really Buy from You?
The following is a simple question for business owners. Why do your customers buy from you?
I told you the question was simple, but an accurate answer, on the other hand, can be far more complex and perhaps even elusive. To achieve long-term, sustainable success, your understanding of why your customers choose to do business with your company needs to be both correct and substantial.
Many business owners develop a customer value proposition (CVP) alongside their company mission and vision statements. The brief declaration is supposed to document why a customer would opt to buy your product or service over the competition.
While developing a CVP is commendable in its customer-centric approach, it often falls short of its intended purpose due to ambiguity, a lack of self-reflection and sometimes even outright insincerity. Dollars to doughnuts, there is not a single CVP out there that reads, “Our customers turn to us because we deliver lackluster service and a marginally good product.”
Related: Who Is More Important — Your Customers or Your Employees?.
I would also assume that there are many businesses whose CVPs portray an exaggerated sense of the company’s true customer value. CVPs should never be created based on hype or manufactured mantras; instead built from sincere, astute insight.
Bravado and disingenuousness are not the only ways business owners are misguided in their understanding of customer engagement and loyalty. The following are common misconceptions related to the question of why customers buy from you.
“We are the cheapest”
Sure, this value statement might be dressed up as “We deliver the best value,” “We are the low-price leaders,” or some other cost-based differentiator. But when I hear any form of “My customers buy from us because we are the cheapest,” I cringe. Competing on price alone is simply not a good model and is often unsustainable. There is always some other business owner who is willing to run out of cash faster than you are.
Most customers – both B2B and B2C – understand the balance between cost and value. They walk that tightrope in every purchase they make. Contending that cheapest is the key attribute that keeps them coming back shortchanges both your business and your customers.
“We have the best employees”
Forgive me for being a bit skeptical about this assertion as well. Sure, your business may have good employees; but are they really the best? You may provide excellent service, but your competitors probably do as well. Is it truly your employees that keep your customers coming back? With the rare exception of that ultra-charismatic salesperson who charms the socks of buyers, the answer in all likeliness is a resounding no.
That is not to say that hiring for personality and alignment with company values is unimportant. It most definitely is. But to put the onus of success and customer loyalty squarely on the shoulders of your employees is shortsighted.
Related: 3 Reasons Why I Gladly Welcome Competition
“We’ve got the best product on the market”
While possessing a corner on the market is a great position to be in, it does not account for innovations in the marketplace and often fickle changes in consumer preferences. Evolving customer motivations and expectations, coupled with aging business models, have been the downfall of even some of the most successful industry titans.
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