Business to face emerging-market headwinds in 2016, The Economist Intelligence Unit reports

Business in 2016 will benefit from an improved global economic backdrop but must prepare for volatility in emerging markets, argues a new special report published by The Economist Intelligence Unit. For many companies, China’s slowdown and continued global pressure on prices could undermine the benefits brought by the US and European recovery. The free report, Industries in 2016, brings together analysis and forecasts for six industries, identifying key strategic business issues in the year ahead:

  • Global car sales will rise again, by around 3%, but growing spare capacity in emerging markets will trouble vehicle-makers
  • Weak consumer appetites in key markets will hurt consumer goods and retail companies, as will the dominance of discounting but global retail will still grow by 2.7%
  • Green energy use will gain ground despite low fossil fuel prices: a barrel of Brent crude oil will cost on average around US$53 a barrel in 2016
  • Regulations governing financial services firms will tighten, but rising interest rates will buoy US and UK banks. We are expecting US rates to rise 1.25% by end-2016, in the UK we expect the first interest-rate hike in the final quarter of 2016 and that rates will be at 1% by the end of the year
  • Healthcare spending will accelerate, although the cost-cutting pressures that have prompted a wave of recent mergers will persist
  • Telecoms companies are in for further disruption, as 4G mobile technology catches on and the “internet of things” permeates ever more industries

Martin Adams, industry analyst at The Economist Intelligence Unit, said: “Across industries, companies must prepare for parsimony among governments and consumers, as well as tightening regulations and more digital disruption. Although the outlook for the global economy is healthier, the pain is far from over in big emerging markets like Brazil and Russia. Still, disruption for one company spells opportunity for others.”

The winners in 2016 will include financial technologies firms that prove nimbler than their established peers; high-street stores able to harness technology to win over customers; and pharmaceuticals firms that find ways to persuade payers that their products really do improve patients’ lives. In all six industries, companies will seek to harness “big data”.

The report also pinpoints other events to watch out for in 2016, including:

  • Apple’s in-car entertainment software, CarPlay, will be available in many new car models.
  • China’s Singles Day sale, on November 11th, could follow the US’s Black Fridayin going global.
  • Iran is set to send an extra 500,000 b/d or so of oil gushing back onto global markets.
  • South Korea’s new roster of online banks will open up for business.
  • Alzheimer’s research will show real progress, thanks partly to increased state funding.
  • The European Commission will firm up its “Digital Single Market” strategy, which it hopes will add €415bn to Europe’s GDP each year.

Download the full report at: