STRATEGY & CONSULTING
Forward-Looking Macroeconomic Insights
The foresight you need to anticipate change and understand how major global macroeconomic shifts impact your corporate strategy.
5-MINUTE READ
August 21, 2023
Overview
Business leaders need data-driven insights to continuously steer their companies along the path to growth.
We offer strategic advice to inform C-suite strategic planning, corporate development, customer strategy and M&A. Our goal is to translate complicated trends into simple, pragmatic recommendations for our clients.
We provide detailed business insights on key economic trends, such as how consumer behavior is changing, corporate finance developments and risk analysis. We help senior executives assess economic risks and monitor key trends, as well as support business-critical modeling and analysis.
We have hubs in the US, Europe and Asia and work across a wide range of industries to help businesses address the most important macroeconomic challenges for their sector. And our macro-analysis helps clients to carry out scenario and impact analysis, track industry value shifts and understand supply chain exposures.
How we work
In the Spotlight
Think like an activist: Fortify your firm, self-disrupt and drive stakeholder value
Leaders should think like an activist and look internally to evaluate how their business could be transformed to future-proof operations.
Executive Summary
Last year we witnessed an upward trend of activist campaigns, with a growth of over a third compared to 2021. The challenging global macro environment—characterized by rising inflation, high interest rates and geopolitical tension—has made it more attractive for activists to target companies with room for improved returns. Additionally, these investors hold significant capital, which provides them with resources to deploy.
While activist investors may focus on the goal of creating long-term value, their intrusion may be disruptive to the business. These investors use a variety of tactics to pressure management and force them to make changes.
To protect their companies from being targets, management teams should adopt an activist mindset and proactively assess vulnerabilities. Regular reviews of business performance, operations and strategy are essential—especially in a challenging economic environment
Key considerations
To self-disrupt and protect the business from activist capture, corporations should consider the following preventative measures.
1. Stress-test assets to confirm alignment with firm-wide strategy and return expectations.
2. Re-evaluate long-term value creation thesis.
3. Revisit corporate structure and unit economics to improve overall enterprise agility.
4. Put ESG risks on top of mind.
While making changes, transparent communication is key to maintaining clarity and building trust with shareholders. They should be engaging frequently with institutional investors to discuss long-term strategy, gather feedback and address any concerns in a timely manner.
So, while the pace may moderate, the rebound in activist campaigns driven by global economic conditions remains a prominent trend in the corporate landscape. Leaders need to be prepared and “think like an activist.”
Previous POVS
Executive summary
Carbon is now a mainstream topic in boardroom agendas. Leaders worldwide have set ambitious emission-reduction targets, responding to pressures from investors, customers, governments and a tightening regulatory landscape. But climate economics are complex, and although the imperative for climate action is clear, the cost of inaction is uncertain.
What is evident is that, as solutions for decarbonization evolve, carbon markets will play a critical role to balance a net zero system. Managing carbon exposure will be a key consideration for all corporations during capital allocation decisions, in the development of new business, and for managing corporate risk.
Voluntary carbon markets (VCMs) are growing fast, and as they become a critical tool to achieve net zero, an ecosystem of new participants, products, regulations and standards is forming. As such, companies need a basic understanding of VCMs, what they may mean, what role they play, and what capabilities they require.
Executive Summary
In 2022, the re-opening of economies created a consumer spending impetus that hit up against a high cost-of-living crisis. Consumers pushed through headwinds by drawing on savings accumulated during the pandemic, trading down to budget products, and cutting back spending on big-ticket durables. This allowed spending to remain mostly resilient, especially in the US. But this year, the consumer cycle will likely reach an inflection point. People are facing persistent inflation and high interest rates, increasing household wealth erosion from falling asset prices, and growing income and employment uncertainty. A significant slowing of consumer spending is likely, with high risk of whiplash and cliff effects. What does this mean for consumer-facing businesses?
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Monthly briefs
Our monthly briefs summarize key global macroeconomic developments and are intended to inform executive teams, boards and investors on the state of the economy.
Year-end Macro Brief
Into the fog of winter
Executive summary
As 2023 draws to a close, the global economic landscape reveals unexpected resilience amid the challenges that have marked the year. Whether this benign trajectory can be sustained is less clear. Economies are now transitioning from post-pandemic normalization to a more “structural” growth regime facing a new set of challenges – tighter global supply and financial conditions and rising geopolitical tensions.
These transition dynamics imply high near-term economic uncertainty, with arguably more downside than upside to the outlook due to the delayed impact of monetary policy tightening, the withdrawal of government support measures, and policy uncertainties in key geographies. Add to this mix the wildcard of energy prices, threatened by a cold European winter or disruptions from conflict in the Middle East.
What should companies do?
Companies should be prepared for a potential downshift in economic growth at the tail end of 2023 and into early 2024, including a weaker winter holiday shopping and travel season, and thus consider slimming their inventories or pricing less aggressively amidst softening demand.
In the face of heightened economic, financial and geopolitical uncertainty, scenario planning takes on added importance as both a tool for effective risk management and for anticipating opportunities for tactical M&A and consolidation of market share.
As economies transition to a tighter labor, energy and liquidity regime, scenarios where high inflation persists even as demand growth slows increase in likelihood. Accordingly, companies—especially those in low-margin industries—should consider how they would adapt to structurally higher labor and input cost inflation or manage through greater volatility in energy and commodity prices and financial markets.
Previous Briefs
Global growth continues to slow, but data shows conditions vary by geographic economies. Learn why.
Economic growth globally continues to trend lower and gathering headwinds suggest further slowing ahead.
Though the cyclical trend in manufacturing is negative, emerging shifts are improving the longer-term outlook.
The stickiness of inflation weakens growth momentum and pressures central banks to implement monetary tightening.
Global growth remained resilient but uneven in May as the divergence between a strong services sector and weak industrial performance widened further.
Data suggests major economies have not been significantly derailed by recent financial stress and remain on slow growth path.
Concerns about financial stress and instability cast a cloud over the global economy in March following the failures of several banks.
Global economic activity has exhibited some green shoots over the past two months and suggests an improved growth outlook in the near term.
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