Emerging regions are expected to outperform developed regions by some margin this year, with growth rates (Q4 over Q4) jumping from 2.8% in 2022 to 4.5% in 2023.
Vietnam and Thailand are expected to perform well among emerging countries. Meanwhile, China and India alone are projected to drive half of global economic growth this year, providing fertile ground for brands worried about the lackluster prospects of advanced economies.
Despite the high growth potential now expected for China, back in January 2023 half of chief economists had only moderate growth expectations for the country. Its real estate crises, tight labor markets and tensions with the US, coupled with the hangover from its zero-Covid policy were cited as reasons for their moderation. However, as we approach the middle of the year, there is near unanimity that China is bouncing back.
Chinese consumers saved one-third of their income last year, compared with only 17% of their earnings before the pandemic. Hopes of these household savings fueling a rebound in Chinese demand caused France’s stock market to surge to record highs in April as investment poured into luxury brands Hermès, Kering, LVMH and L’Oréal.
Meanwhile, India marked a major milestone in 2022 when it overtook the UK to become the world’s fifth largest economy. The upcoming superpower also stands out in 2023 as the only country where consumer confidence has improved since 2021. Whereas 62% of consumers in Brazil believe now is the time to hold off from making purchases––a pessimism echoed by Japan––we see a marked distinction in India, where 31% of consumers believe it is a good time to buy.
Affluent Indians cushioned from cost-of-living pressures are driving demand for premium consumer products, alcoholic beverages, and devices, which explains why the technical consumer goods market is showing a clear upward trend, growing by 31% in local currency at the end of 2022 and with relatively modest inflation of 5.7%.