The pressure on business leaders remains significant as recovery from the disruption of the COVID-19 pandemic remains slow. Rising interest rates have only recently begun to get a grip on the stubbornly high inflation that has plagued the global economy, and the threat of recession remains.
The push for sustainability, especially within the European Union, means that companies that have not yet engaged with the green agenda will be forced to do so. At the same time, technology continues to evolve and throws up new ways of doing business.
Here are five themes that will shape the business environment over the next year.
Chances of a recession remain elevated in developed markets
Although US President Joe Biden certainly doesn’t want one going into an election year, the chances of a recession in the US are high. Traditionally, when there is an inverted yield curve in the bond market – when short-term debt instruments have a greater yield than longer-term bonds – there is an increased likelihood of recession. An inverted yield curve has been in place in the US market since mid-2022.
The risks of an economic downturn in the US are not helped by party politics. Mike Johnson, the new Republican speaker of the House of Representatives, takes a harder line than his predecessor Kevin McCarthy, and a government shutdown remains a threat until the end of January. Were millions of US government employees furloughed, then that would accelerate a recession.