Maharashtra Economic Development Council महाराष्ट्र आर्थिक विकास मंडळ

Viewpoint: Crystal Gazing into 2023

19 DEC,2022 | MEDC

2022 has been a mixed year for the world’s political economy. It began with promise but ended with a compromise. The waning of Covid was expected, but the events in Eastern Europe were not. Inflation (and the accompanying monetary tightening globally) was aggravated by the Russian action in Ukraine earlier this year. The global economy is facing increasing uncertainty on the energy front, just as we are leaving the worst of Covid behind us. But by maintaining neutrality in the unfolding Ukrainian saga, the Indian economy has certainly benefited a lot.

In today's increasingly fluid world, it is becoming obvious that nations are as different as they are alike. Economic alliances are being forged and broken, based largely on nationalist considerations. Inflation is making it clear that (at least in the developed world) there is not too little but too much spending in the economy. Unless strong government action is taken, the appeal of a green fiscal stimulus is weakening. The economics of de-carbonization is not as complicated as the politics behind it. However, in 2023, India is likely to go far in the development of electric vehicles and its supporting infrastructure, thus leading to a dip in pollution at least in some major metros.

The pandemic may be on its way out in most of the world, but the recent abandonment of China’s “zero Covid” policy could lead to a deluge of infections and deaths. That might spill over into other parts of the world as global transport and communication facilities are restored. Epidemiologists also warn about the emergence and spread of new strains of the virus, which could threaten existing human immunity defenses, thus impacting economic activity.

2023 is likely to see a rise in work-from-home and hybrid work patterns. Working from home has both advantages and disadvantages. The former includes decongesting urban areas as well as saving both time and energy in commuting, while the latter includes legitimate concerns of lower productivity, especially amongst less-committed employees. Most organizations are not likely to favor either extreme, but will instead try to find the golden mean that incorporates the best of both worlds. This is likely to be a dominant feature of tomorrow’s workplace.

With responsibility comes the burden of expectation. India will be challenged to bring its Presidency of the G20 to a successful conclusion by November 2023. This would include some clear progress on the global issues that matter, especially to the developing country members of G20. Forging a consensus on almost any socioeconomic issue in today’s world is not easy, but India should be able to do better than most of its predecessors. Probably the biggest area of concern is that of climate change, as most countries continue to lag behind the official timetable for the required corrective action.

With the global economy on the brink of recession, it will be a challenge for India to maintain sustained economic growth. This is where the domestic market will need to be strategically harnessed. Since exports cannot be enhanced beyond a point, India will need to be promoted as an attractive investment destination. This is our chance to project our economy as a viable alternative to that of China. With the trajectory of the Ukrainian situation being almost impossible to predict, when and how normal economic activity resumes worldwide remains uncertain. Our policymakers will face an acid test, but we are sure they will emerge from it with flying colors.

*Picture Credit -Google

Viewpoint: Crystal Gazing into 2023

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