EGS Biweekly Global Business Newsletter Issue 75, Tuesday, February 7, 2023

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First, A Few Words of Wisdom From Others

“A journey of a thousand miles begins with a single step.”, Ancient Chinese proverb

“Happiness and freedom begin with one principle. Some things are within your control and some are not.”, Epictetus, 55-155 AD

“The desire for safety stands against every great and noble enterprise.”, Tacitus, 56-117 AD

Highlights in issue #75:

NOTE: Bolded headlines in this newsletter are live links where the article is available without a paid subscription.

Interesting Data and Studies

“IMF Boosts Global Growth Forecast, Saying a Recession Is Unlikely – The IMF upgraded its forecast for world growth to 2.9% from a previous prediction of 2.7% in October. It sees the expansion accelerating to 3.1% in 2024. In 2022, it estimates the world economy grew 3.4%. ‘The year ahead will still be challenging,’ said IMF Chief Economist Pierre-Olivier Gourinchas. ‘But it could well represent the turning point, with growth bottoming out and inflation declining.’”, Barron’s, February 3, 2023

“The world’s most, and least, democratic countries in 2022 – The EIU’s global democracy index shows several authoritarian rulers tightened their grip. The annual survey rates the state of democracy across 167 countries on the basis of five measures with a maximum score of ten—electoral process and pluralism, the functioning of government, political participation, democratic political culture and civil liberties. The latest edition finds that almost half (45.3%) of the world’s population live in a democracy of some sort, while more than a third (36.9%) live under authoritarian rule.”, The Economist, February 1, 2023

“GDP Growth Forecasts by Country, in 2023 – Since Russia’s invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023. High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later. For European economies, energy prices are critical. The above infographic maps GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.”, Visual Capitalist / Markets In A Minute, February 2, 2023

“Global Unemployment in 2022 – In poor countries, employment has increased but job quality remains low. The global economy is facing a potential recession in 2023 that threatens to undo the post-pandemic job recovery. Globally, employment has increased but job quality remains low, especially in lower-income countries where informal employment is prevalent. The volatility in markets and pessimistic economic climate are hindering investment and slowing productivity. Access to quality jobs with strong wages is becoming increasingly difficult.”, Geopolitical Futures, February 3, 2023

“2023 Business Predictions As AI And Automation Rise In Popularity – A Deloitte study recently found that over 50% of organizations are planning on incorporating the use of AI and automation technologies in 2023. While many top executives are worried about the risks of AI usage, other high-achieving organizations are adopting new tech-savvy operational processes. A survey of Global 500 companies found that leaders choosing to invest in AI and automation business tools and software solutions expect to see significant growth within the next few years. To help your business prepare for a successful year, here are some predictions of how business practices will evolve in 2023.”, Forbes, February 2, 2023

“The Top 50 Most Visited Websites in the World – Estimates vary, but there are upwards of two billion websites in existence in 2023. Topping the list of most-visited websites in the world is, of course, Google. With over 3.5 billion searches per day, Google has cemented its position as the go-to source for information on the internet. The company also owns YouTube, the second-most popular website in the world. Together, Google and YouTube have more traffic than the next 48 websites combined. The power of YouTube, in particular, is sometimes not fully understood. The video platform is the second largest search engine in the world after Google.”, Visual Capitalist, January 24, 2023

Global Supply Chain, Energy, Commodities, Inflation & Trade Issues

“What inflation means for the Big Mac index – The competitive advantage of fast-food nations. The iconic McDonald’s burger is an amalgam of rent, electricity and labour, as well as beef, bread and cheese. Its price is therefore indicative of broader inflationary pressures. And because the burger is basically the same wherever you are in the world, its price can also reveal how inflation has changed the relative costliness of different countries. The combination of rising prices and a rising currency threatens to move American prices out of whack with those elsewhere in the world. Two years ago, for example, the Big Mac was 26% cheaper in Japan than America. In principle, this suggests the yen was undervalued and should have risen against the dollar. A Big Mac is now more than 40% cheaper in Japan.”, The Economist, January 25, 2023

“Visualizing the Scale of Global Fossil Fuel Production – Fossil fuels have been our predominant source of energy for over a century, and the world still extracts and consumes a colossal amount of coal, oil, and gas every year. In 2021, the world produced around 8 billion tonnes of coal, 4 billion tonnes of oil, and over 4 trillion cubic meters of natural gas. Most of the coal is used to generate electricity for our homes and offices and has a key role in steel production. Similarly, natural gas is a large source of electricity and heat for industries and buildings. Oil is primarily used by the transportation sector, in addition to petrochemical manufacturing, heating, and other end uses.”, Visual Capitalist, January 31, 2023

“BP cuts long-term forecast for oil and gas demand – Group’s latest annual outlook says energy security concerns will spur more investment in renewables. BP has trimmed its outlook for oil and gas demand in its latest annual forecast, arguing that the upheaval unleashed by Russia’s invasion of Ukraine will push countries to pursue greater energy security over the next decade by investing in renewables. As a result, global carbon emissions could peak earlier in the 2020s than it had previously suggested, BP (British Petroleum) said in its annual energy outlook on Monday.”, The Financial Times, January 29, 2023

Global & Regional Travel Updates

“Rising Jet-Fuel Costs Threaten to Send Airfares Higher – Prices have jumped, partly because of swelling travel demand as China eases its Covid restrictions. Prices for the kerosene-based product have been climbing since December, propelled by diminished supplies after winter storms shut down refineries. Swelling demand has also pushed up prices, as millions of Chinese travelers took to the skies to celebrate the Lunar New Year and newfound freedom from Covid restrictions. The global jet-fuel price index maintained by S&P Global is up 20% since Dec. 7, while prices on the U.S. East Coast are up about 77%.”, The Wall Street Journal, February 2, 2023

“Final Boeing 747 rolls off assembly line: “It’s not just another airplane”. The 747 was the world’s first jumbo jet. Twice as big as any other airliner when it first flew back in 1969. Pan-Am welcomed the first passengers on board a year later. Over more than 118 million flight hours and counting, the 747’s four engines have carried millions of passengers, six U.S. presidents and even the space shuttle across the country and around the world. After 1,574 of the 747s were built, this marks the end of the line for the Queen of the Skies at Boeing.”, CBS News, February 4, 2023

Country & Regional Updates

Canada

“As COVID-19 wanes and recession lurks, corporate profits boom – In spite of inflation, spiking interest rates and the threat of recession, 2022 was a great year for corporate Canada, with the biggest companies in the country having more than rebounded from COVID. A Globe and Mail study of the financial statements of more than 200 publicly traded companies shows that, in the first nine months of 2022, revenue was up 37 per cent and net income was up 40 per cent over the first nine months of 2019, the last “normal,” prepandemic year of business. The growth in corporate earnings – which can be seen across multiple measures of profitability – is outpacing workers’ wages and the Canadian economy as a whole.”, The Globe and Mail, February 6, 2023

China

“China economic activity swings back to growth in January – The official purchasing managers’ index (PMI), which measures manufacturing activity, rose to 50.1 in January from 47.0 in December, the National Bureau of Statistics (NBS) said on Tuesday. Economists in a Reuters poll had predicted the PMI to come in at 48.0. Since the result was above 50.0, it implied growth. A rebound in non-manufacturing activity was more decisive than expected by economists – but helped by a seasonal surge in spending for the Lunar New Year holiday. That index, which covers services, leapt to 54.4, from 41.6 in December.”, Reuters, January 31, 2023

“Shanghai shopping malls poised for surge of new tenants chasing post-pandemic ‘revenge spending’ spree – At least 13 global chain-store operators have already set up or plan to open their first mainland Chinese shops in Shanghai this year. China’s exit from its zero-Covid strategy will unleash pent-up demand for packaged food and personal-care products, according to a study. “In 2023, a strong recovery of shopping activities will be seen from the second quarter,” said Sherril Sheng, research director for the residential sector at JLL China. “More lease agreements will be signed as new-energy vehicle, personal care brands, garment makers and outdoor sportswear companies look to open new stores.”, South China Morning Post, February 5, 2023

Eurozone & European Union Countries

“Eurozone avoids recession as economy expands in fourth quarter – Mild weather and government support help region offset energy price rises triggered by Ukraine war. Bert Colijn, senior economist at ING, the bank, said the region’s economy was showing “incredible resilience” in the face of the energy crisis triggered by Russia’s invasion of Ukraine. Tuesday’s data means that the region managed to grow in each quarter of 2022 and by 3.5 per cent over the course of the year.”, The Financial Times, January 31, 2023

“The $16 Trillion European Union Economy – The European Union has the third-largest economy in the world, accounting for one-sixth of global trade. All together, 27 member countries make up one internal market allowing free movement of goods, services, capital and people. The modern version of the EU can trace its origin to 1993, with the adoption of the name, ‘the European Union,’ the birth of a single market, and the promise to use a single currency—the euro. Since then the EU has become an economic and political force to reckon with. Its combined gross domestic product (GDP) stood at $16.6 trillion in 2022, after the U.S. ($26 trillion) and China ($19 trillion.)”, Visual Capitalist, January 23, 2023

Germany

“German economy shrinks as soaring energy costs pinch demand – Unexpected fourth-quarter contraction shows how hard manufacturing has been hit. The German economy unexpectedly contracted by 0.2 per cent in the final quarter of 2022, as high gas prices squeezed demand and placed the eurozone’s manufacturing powerhouse on the brink of recession.”, The Financial Times, January 30, 2023

India

“India economic outlook, January 2023 – Healthy domestic drivers will help India post a strong growth of 6.5%–6.9% in FY2022–23, but global economic exigencies may cast their shadows on the outlook for the rest of 2023. Apart from the customary change in dates, very little in the new year feels different from the one gone by for the global economy. Geopolitical uncertainties continue unabated, a legacy of the last year, and there’s wide consensus among economists now that the global economy is on the verge of entering a phase of severe slowdown. It is unlikely that India will remain insulated from these developments. But here is a bit of good news as far as India’s economy goes—there are enough reasons to be optimistic about India’s economic outlook in 2023. In particular, healthy domestic drivers will likely help the country post reasonably strong growth this year.”, Deloitte, January 25, 2023

Japan

“Japan Inc strives to lure skilled workers as inflation, labour crunch bite – From inflation allowances to the reskilling of workers, firms in Japan are stepping up efforts to help employees fight rising prices and a labour crunch, even though some cannot afford pay hikes that do more than offset cost-push inflation. As annual “shunto” labour talks get into full swing, momentum from both labour and management is growing for firms to offer such hikes to cushion, even if not beat, consumer inflation, which hit a 41-year high of 4% in December.”, Reuters, January 30, 2023

Saudi Arabia

“Saudi Business Confidence Hits Two-Year High As Boom Continues – The Riyad Bank Saudi PMI rose to 58.2 from 56.9 in December, well above the 50-mark separating growth from contraction. Last month’s figure was the second-highest recorded since September 2021 after November’s more than seven-year high. It’s the latest sign that last year’s economic boom is continuing even as oil prices fall from recent highs. Overall growth was an estimated 8.7% last year, Saudi official projections showed, making it the fastest growing major economy.:, Bloomberg, February 5, 2023

South Korea

“China’s reopening stirs hopes that South Korea can turn around a record trade deficit – South Korea logged a US$12.69 billion trade deficit in January, with the total value of exports falling by 16.6 per cent from a year earlier. Exports to China decreased by 31.4 per cent in January year on year, due primarily to economic disruption from Covid outbreaks. Other factors included a seasonal increase in energy imports over winter amid high global costs and a sharp drop in semiconductor export prices. Semiconductors are the biggest export item for South Korea, making up 18.9 per cent of the country’s total export value last year.”, South China Morning Post, February 1, 2023

Spain

“Spain’s economy is recovering from the pandemic, but problems persist – In January 2022, an index by The Economist, ranking 23 countries’ recoveries from the pandemic, put Spain in last place. The government criticised the index, while the opposition was bound to jeer. A year later, a similar exercise put Spain in 4th place, and it was the government’s turn to strut. And the flattering numbers continue to appear. Annual inflation, running at 5.6% in December, is the lowest in the euro zone, in part because Spain consumes little Russian gas. The main share-price index has made up most of its losses. The unemployment rate is the lowest since 2008, when the financial crisis burst a construction bubble. Tourism rebounded strongly last year.”, The Economist, January 27, 2023

Turkey

“Turkey’s tourism gains in war-hit 2022 but trade deficit widens – Turkey’s tourism revenue hit a record $46.3 billion in 2022 even as its trade deficit swelled to more than $109 billion, as a fallout from war in nearby Ukraine brought a surge of Russian arrivals but also drove up energy-import costs. But even as arrivals at Turkey’s Mediterranean beaches and historical sites brought in forex, energy imports shot up by more than 90% to $96.55 billion in 2022, the official data showed. The overall foreign trade deficit surged 137% year-on-year to $109.54 billion in 2022, according to the general trade system, the data showed, while the December deficit increased 42% from a year earlier.”, Reuters, January 31, 2023

United Kingdom

“FTSE 100 defies gloom to close at record high after US jobs surprise – The FTSE 100 closed at a record high today after unexpectedly strong jobs figures from America buoyed the value of Britain’s biggest listed companies. The benchmark UK index reached its highest ever intra-day level of 7,906.58 — beating the 7,903.5 points set on May 22, 2018 — around an hour after the employment data was released. It closed at an all-time high of 7,901.8, up 1.04 per cent during the session, topping the previous peak closing figure of 7,877.45 set on the same day four-and-a-half years ago.”, The Times Of London, February 3, 2023

“Bank of England raises UK interest rates to 4% – Hike of 0.5 percentage points lifts rates to 14-year high, but BoE says shorter and shallower recession now more likely. Publishing an updated outlook for the economy alongside the rate decision, the Bank said that inflation “is likely to have peaked” and a recession would be less severe than previously predicted, but said Brexit was damaging the economy more quickly than it had anticipated.”, The Guardian, February 2, 2023

United States

“(U.S.) Jobs Growth Was Double the Forecast. It’s a Challenge for the Fed. – Nonfarm payrolls increased to 517,000 last month, up from 223,000 jobs in December. The latest reading was more than double the 185,000-job increase expected among economists surveyed by FactSet. The unemployment rate fell to 3.4% from 3.5%, rather than rising to 3.6% as economists had estimated.”, Barron’s, February 3, 2023

“Americans fear recession, but most believe their jobs are safe – Many Americans (73%) said they had a negative outlook on the economy, according to a recent survey by fintech company Achieve. However, 74% said they didn’t believe a downturn would impact their jobs. Additionally, 73% of respondents said they had no plans to leave their current employment, signaling that the Great Resignation trend, which saw droves of workers quit their jobs in the last two years, may be coming to an end, the survey said.”, Fox Business, January 30, 2023

Brand & Franchising News

“Former Subway CEO invests in Oz health chain – Suzanne Greco, the former international chief executive of sandwich chain, Subway International, has joined Brisbane-based wellness brand City Cave as a shareholder in the international expansion of the business, according to a post on LinkedIn. City Cave has approximately 50 outlets in Australia providing float therapy, massage and sauna services, and won the NextGen in Franchising Award at the 2019 International Franchise Association annual conference in Las Vegas, an annual competition which invites young entrepreneurs from around the world to submit innovative business ideas to grow via franchising.”, LinkedIn, January 2023. Compliments of Jason Gehrke, Managing Director, Franchise Advisory Center, Brisbane, Australia

“Starbucks Net profit in the first fiscal quarter increased by 4 8 percent  year on year to US855 2 million, and the number of stores in China reached 6,090 – In terms of the number of stores, there were a net increase of 459 stores in the first quarter, and the total number of stores worldwide reached 36,170 at the end of the quarter. By the end of the first quarter, the number of stores in the United States and China accounted for 61% of the world, including 15,952 stores in the United States. In terms of the Chinese market, Starbucks also stated that in the first quarter, Starbucks China opened 69 new stores and entered 10 new cities. At the end of the quarter, the company had 6,090 stores in China, covering 240 cities.”, Caijing.com.cn, February 3, 2023. Compliments of Paul Jones, Jones & Co., Toronto

“Subway to Add Thousands of Restaurants Outside the US – The chain aims to increase its international locations to around 25,000 over 10 years from roughly 16,000 today, Mr. Chidsey said. The expansion is part of a plan to raise Milford, Conn.-based Subway’s sales to around $25 billion annually from its current $16 billion. Mr. Chidsey said that much of the company’s growth lies abroad, with sandwiches resonating well with many different dietary preferences and the chain facing much less competition. ‘The unit-growth story continues to be international,’ Mr. Chidsey said.”, The Wall Street Journal, February 2, 2023

“Why 2023 will be a year of weaker (US) sales and higher margins – Fitch Ratings expects modest restaurant growth this year. But recent price increases and an improving inflationary environment should help with profits. Low-price restaurants like Taco Bell can be expected to outperform full-service chains and those with higher prices. In 2022, restaurants watched their profits shrink even as their sales growth remained strong or even accelerated. This year should be the opposite, as last year’s price increases coupled with an improving inflationary environment lead to improved profits even as sales growth weakens.”, Restaurant Business, January 30, 2023

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Our Mission, Information Sources & Who We Are

Our biweekly global business update newsletter focuses on what is happening around the worldthat impacts new trends, health, consumer spending, business investment, economic development and travel. We daily monitor 30+ countries, 40+ international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Our GlobalTeam™ on the ground covering 25+ countries provides us with updates about what is actually happening in their specific countries. 

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Over 4 decades William (Bill) Edwards has played a leadership role in the global growth of more than 40 brands. He is widely recognized as an International Problem Solver, Strategist, Advisor and a specialist on global cultures. His career covers international operations, executive and entrepreneurial experience in the energy, technology, licensing, management consulting and retail sectors. As a Global Advisor, he now shares his experiences and wisdom with senior executives to help them successfully navigate the complex international company growth landscape.

For more information on how to take your business global successfully, contact Bill Edwards at bedwards@edwardsglobal.com or +1 949 224 3896. 

www.edwardsglobal.com

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