A new year brings with it new opportunities. Spotting opportunities (and threats) and charting trends are essential skills of a business leader. Making sense of the past uses some of the talents of a historian while predicting the future would seem to require those of a clairvoyant.
As we ended 2022 there was a lot of talk of recession to come. As it turned out it was perhaps
overstated. According to ONS [GDP monthly estimate, UK - Office for National Statistics
(ons.gov.uk)], the UK’s GDP actually grew 0.1% in November, apparently helped by consumer
spending during the World Cup. According to Destatis [Germany's economy grew by 1.9% in 2022, latest data shows – DW – 01/13/2023], Germany also grew by 1.9% for the whole year, despite rising costs in energy, raw materials, and the ever-present Covid-19 pandemic. Recession may be averted. Inflation remains a persistent problem in the UK and the Eurozone but, at the start of 2023, in the USA it seems to be nudging lower with news from the Bureau of Labor Statistics [Consumer Price Index Summary - 2022 M12 Results (bls.gov)] that the Consumer Prices Index (CPI) has fallen to 6.5%. Central banks may yet rate base interest rates to continue to bend the inflation curve. But the business outlook seems to be improving.
GDP growth, price inflation, and interest rates: these are key macroeconomic indicators that a company leader should be aware of. They describe the big picture in which markets operate. They should be considered when making decisions such as about capital investment or headcount. Like a car’s rear-view mirror, they are backward-looking.
For the way ahead, you need projections or forecasts. These are produced by commercial
organizations – like banks, investment firms, and trade associations – and many are publicly
available. Of course, they are best guesses, and they are mostly wrong. But the analysts who
produce them do revise their estimates frequently; understanding the reasons for changes can be insightful.
Add exchange rates, consumer or business sentiment such as the Purchasing Managers’ Index [Purchasing Managers Index (PMI) monthly by country 2022 | Statista], and specific metrics for your particular markets by year, quarter, or month, and the resulting profile will provide a snapshot of essential, comparative data for business planning. Early in my career, one of my key tasks was to produce a single-page summary and update exactly this information for review by the leadership team at monthly management meetings.
A company looking to expand overseas should keep a continually updated dashboard of these key business indicators for each country served or of interest and track them over time. That way there will be fewer surprises and more chances to discover profitable opportunities.
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