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The expectations for the world economy to go into a new year are dampened by multiple challenges. The deep fears of a recession have taken over in many sectors, and it has had its fair share of taking actions-cutting jobs, restructuring, and many similar steps. With this in the picture, the manufacturing sector, in all the economies would likely go in for some major changes.
Many of the sub-industries helping the sector are said to have taken a major hit on multiple fronts. The rise in energy costs and input prices has taken a major hit in production. If one looks into production and demand- it is said to be highly volatile. With weaker demand from consumers and industries, it's likely to show a weak show in terms of performance of all the manufacturing sectors.
The good side for manufacturing is that consumer-based products would likely sustain the economy. The food sector is likely to show some kind of promise to boost demand in the economy. With strong demand projected in terms of the pharmaceutical sector as well, there is likely to show some level of stable demand from the world economy.
Supply shocks -what to expect
With the pandemic and the Russia-Ukraine crisis, there was an absolute disruption in the supply of goods and services. The manufacturing sector suffered due to a lack of materials and did create a major shortage, worldwide. The outlook for 2023 is likely to show promise, by addressing the bottlenecks. With improved techniques in terms of warehousing and improving inventories, it's likely to show some promise, to prevent the issues we had since 2020. A promising sign in this aspect is that the improved levels of the Logistics Manufacturing Index, since the third quarter of ’22, give the world hope to resolve the issues more amicably. The economy, showing a trend of opening up China’s on-and-off issues of rising cases of Covid – continues to be a black cloud in the recovery process
The major change in trends in manufacturing
Investment in automation and digital tools is more likely the trend going forward for this sector. The technology is said to have grown a great deal, showing promise to reduce costs and achieve better returns. With artificial intelligence and automated tools, it's showing a promise to get quality products. With all the advantages at hand, the supply of manpower is likely to go down. Tighter policies in terms of hiring are more likely, this is in turn to compensate for the higher wage growth in the market.
Picture for India
India is likely to show some promise in contributing a lot more in electronic goods to the global market. With greater levels of investment in R&D and digitalization, there is a scope for growth in the production and exports of electronics, smartwatches, and smartphones. With the 5G spectrum introduced in India, the potential to grow is more of an attainable goal. With the levels of technologies such as robotics, which have helped in giving better products, there is a potential for our nation to grow sustainably.
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