The global economy is entering an increased period of political volatility, particularly in advanced economies. Euromonitor International just revealed the report where they explores the economic landscape in 2017, taking in top trends within Business Dynamics, Cities, Economy, Finance and Trade, Industrial, Natural Resources, Digital Consumer, Households, Income and Expenditure and Population.
I will evidentiate mainly how the retail sector will be affected by the global landscape. You can see the full report here.
The evolving economic and consumer landscape in 2017
1. Political instability is a key challenge going into 2017:
- The Trump effect – much remains unknown about how many of his campaign promises were rhetoric and, of those that do go with him to the White House, how many he could successfully enact.
- Brexit unknown quantity – outside of Europe, its impact on the global economy is more subdued than a Trump downturn, but it adds another element of unpredictability at a time when political volatility is a key concern.
2. Consumers enter 2017 to this backdrop of uncertainty:
- consumer expenditure to rise by 2.3% in real terms, with every household saving US$3,609 on average.
- Despite a slowing economy, Chinese consumers will continue to see one of the largest increases in spending, and expenditure in emerging and developing economies overall will grow by more than twice that of developed markets.
- New Consumerism will strongly influence behavior, as consumers reassess their priorities and values.
The top three trends in Business Dynamics in 2017
- Risks of increasing trade barriers – growing in western countries, as popular discontent with globalisation feeds support for populist and far-right parties.
- Infrastructure investment to spur economic growth – the UK government has unveiled a £23 billion National Productivity Investment Fund to spend on infrastructure and innovation over a period of five years.
- Work-life integration – in 2017, work will be more about what people do, not where or when.
The fastest-growing cities will be the Middle East and Africa
- Abuja (Nigeria) is forecast to grow by 4% in one year
- Doha (Qatar) is set to grow at 3% rate
- Global real growth in consumer expenditure to stagnate at 2.3% in 2017
Top trends in Digital Consumer in 2017
- New digital services will propel digital commerce growth
- Apparel will drive product-based digital growth
- Bank-led mobile proximity payments will expand
Apparel will drive product-based digital commerce growth in 2017
- Euromonitor International estimates that US$1.3 trillion in goods will be purchased over the internet in 2017,
representing 9.6% of all goods sold. Of all product-based digital purchases, the apparel and footwear category will contribute most in terms of absolute value sales, with an estimated US$31.4 billion expected to be
added in 2017.
- Asia Pacific, with its rising middle-class and mobile-first mindset, is a key region driving this category’s digital expansion.
- While online sales represent only a small percentage of total sales in many Asian nations, about one-fifth of apparel and footwear sales in China and South Korea are now made in digital channels.
- China has grown rapidly and sales are now higher than the US.
2017: A year of uncertainty
- Eurozone will continue to see anemic growth
- Brazil and Russia returning to growth next year, albeit weak
- Middle East metropolises will remain world’s most affluent hubs