• Climate change will drive demand in sectors relating to mitigation and adaptation. Insurers, companies and governments will struggle to price in the increasing risks. 

• EU and US regulations on environmental, social and governance (ESG) reporting will push companies to scrutinise their operations and supply chains. However, scepticism about ESG will harden in the US ahead of November’s presidential elections.

• Corporate concerns over taxation will increase as the OECD introduces its global minimum tax rate and individual governments try to reduce budget deficits and national debt levels.

• Geopolitical tensions and wars will complicate government and corporate responses to all of the above. Investment in supply chains, particularly for technology and the energy transition, will adapt to minimise political risk.

• Generative artificial intelligence will disrupt a few sectors, but most companies will find ways to use AI to increase productivity. 

EIU’s annual industry report, “Industry outlook 2024“, provides growth prospects, risks and trends facing six critical sectors in the coming year, as inflation eases but geopolitical tensions remain high. The report argues that the biggest challenge facing businesses next year will be climate change and looks at how experimentation with artificial intelligence will give way to rapid adoption, changing corporate strategies and the nature of work.

Next year is again expected to be the hottest on record, with El Niño adding to the impact of climate change. While some businesses will benefit, helped by government subsidies, the pressure to cut carbon emissions will intensify. Important environmental regulations in 2024 will include the start of reporting for the EU’s carbon border adjustment mechanism as well as much stricter ESG reporting requirements. Even so, we expect use of fossil fuels to reach a new peak.

ANA NICHOLLS, DIRECTOR OF INDUSTRY ANALYSIS AT EIU

The report also provides key global forecasts for each sector covered. These include: 

• Global sales of new electric vehicles will rise by 21% to 14.9m units. Established carmakers will have to fight hard to hold off competition from China.

• Global retail sales will expand by 6.7% in US-dollar terms and by 2% in real terms as inflation eases. High food prices will continue to cause problems in Asia.

• Consumption of renewable energy will rise by 11%, but demand from developing countries will push the use of fossil fuels to new records. 

• Banks will enjoy strong net interest margins and revenue flows until margins begin to narrow mildly in late 2024. Property firms and funds will suffer.

• Healthcare spending will rise by 2% in real US-dollar terms, following two years of decline, as inflation eases. However, resources will remain constrained as governments try to bring down fiscal deficits and public debt levels.

• AI will continue to develop, particularly generative AI, but will encounter challenges from new regulations in the EU and other major jurisdictions, as well as complications from US-China tensions.

EIU’s “Industry outlook 2024” report is available to download here.

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