Profiting from Economic Slowdown

All good things eventually come to an end. 

That’s the conclusion the International Monetary Fund came to last week.  According to new projections, it anticipates that global economic growth will slow from 3.2% in 2022 to %2.7 in 2023. For context, that number was 6% in 2021. 

So the environment we’re witnessing now is only going to get worse. No one can say for sure how long it’s going to last, but there is an agreement that it’s coming. The growth profile that the global economy is looking at is drawing comparisons to the days immediately following 9-11 and the height of the pandemic. 

One glimmer of hope for global markets is the fact that China is reopening its economy after three years. Exporters might see a boost from it, and global brands that had been plagued by disruptions can now rest a bit easier, but that alone isn’t enough to give the global economy the shot in the arm it needs. 

Profiting from Economic Slowdown

As it stands, many foresee the effects of this coming slowdown lasting for a decade. This will be in direct contrast to a predicted continued rise in inflation. What was 4.1% in 2021 is predicted to be 8.8% when the final numbers come out for 2022. It’s believed that will cool to 6.5% in 2023 and drop further from there, but the world will have to go through another spot of pain before we get there. 

So energy prices and the price of raw materials will likely remain elevated. The ongoing war in Russia will play a role in those energy prices remaining high, and will also continue affecting food prices. 

Economists are also seeing a worrying trend of rising bankruptcies, something that declined in 2020 and 2021. On a global scale, it’s believed that business bankruptcies rose around 10% in 2022 and will go up to 19% in 2023. 

These are companies that had to take on loans to get through the pandemic and are now forced to deal with higher interest and those higher energy and materials prices. When you add consumers being more cautious with their spending on top of that, it paints an increasingly grim picture for the global economy over the next 12 months. 

Closer to home, other worrying signs that a rocky 2023 is ahead are beginning to emerge. 

The pandemic years upended the car market, with prices skyrocketing and dealers having trouble keeping cars in stock. Now, analysts are saying a growing number of repossessions signals very clear trouble ahead. 

With budgets getting tighter and stimulus money long since dried up, many people who bought new cars over the past two years are now behind on payments. There’s worry now that those repossessions will continue going up in 2023. Pair that with potentially rising unemployment and it’s easy to see why it’s another sign economists find worrying. 

So, all of these factors point to a 2023 that will be painful for many and provide opportunity for a few. 

There doesn’t seem to be any relief on the horizon beyond what you can do to safeguard your own wealth. That’s why now, with this looming slowdown, you want to be proactive in protecting your wealth. 

By making the right moves, you can profit in any environment. It’s just a matter of making the right defensive investments.

Ryan Stancil

Ryan Stancil
Editor, Daily Profit Cycle