Russia's invasion of Ukraine, surging inflation and the end of the worst of the Covid-19 pandemic all dramatically shaped 2022. But what might the next year bring?
The war in Ukraine dealt a heavy blow to global stability, the shockwaves of which affected energy prices, inflation, food security and changed the dynamics of international politics.
All the while, people struggled with rising costs of living and another recession is said to be on the way next year. Businesses are being advised to prepare for prolonged disruption and volatility.
Even billionaires, who typically escape unscathed, are expected to see a drop in their net worth over the next 12 months.
Here, The National looks at some of the major events of 2022 that will have lasting effects in 2023.
Changes in global affairs, war and nuclear threat
The consequences of Russia’s invasion of Ukraine continue to reverberate around the world, causing an energy crisis in Europe, amid suggestions of a new Cold War.
Global instability has rarely felt so fragile, with the US and an emboldened Nato increasingly clashing diplomatically with Russia on the world stage.
Sweden and Finland have applied to join Nato and the number of high readiness forces has jumped from 40,000 troops to 300,000. No one is sure what Russian President Vladimir Putin will do next.
He has threatened to use nuclear weapons, attacked civil nuclear power stations and falsely accused Ukraine of possessing bioweapons.
In 2023, while the West is being urged to continue its commitment to Ukraine by supplying greater military hardware, Moscow’s nuclear brinkmanship will be a continued focus.
Washington will try to restart nuclear negotiations with Moscow and will also try to engage Beijing.
Iran’s nuclear capabilities also remain a concern, and North Korea’s nuclear weapons programme is a growing threat. Experts at Chatham House pose the question: will 2023 be the year of nuclear conflict or the year when states get serious about non-proliferation and disarmament?
China remains a conundrum. Will it try to gain leverage and influence while the US is preoccupied with Russia. What role might it play in that war? And what about strained relations with Washington that manifest themselves in rivalry in the Pacific.
Domestically, will Covid-19 restrictions continue to be lifted a move which would turbo-charge the world economy. The severity of its zero-Covid policy led to protests across the country.
The US is beginning to recognise China as both a military and economic adversary with growing global influence. The war at the moment is being fought over technological innovation.
Last year, China's President Xi Jinping said this has become the main battleground of the global playing field. That won’t stop in 2023.
Fears over worldwide recession
The global economy continues to be buffeted by several shocks such as the Ukraine war, financial woes, interest rate rises, and the immediate aftermath of the pandemic.
Taken together, these have prompted fears of a worldwide recession in 2023 and the expectation in some quarters of stock market crashes.
Experts from the likes of Goldman Sachs, however, do not entirely share the pessimism. They predict growth will be at a below-average trend of about 2 per cent and the US will come into a soft landing.
“There are strong reasons to expect positive growth in coming quarters,” said Jan Hatzius, head of Goldman Sachs Research and the company’s chief economist, referring to the expectation that real disposable incomes will rise by more than 3 per cent.
However, businesses should be prepared for continued volatility in the years ahead with a prolonged period of disruption and uncertainty.
In the short term, the global economy is by most matrix weakening rapidly. The US and Europe are forecast to experience recessions in the very near term and China after the lifting of Covid-19 regulations will record significantly weaker growth in 2023.
The ageing workforce across many mature and large emerging market economies will have a material dampening effect on growth. Sub-Saharan African economies and emerging Asian economies seem best placed to continue to outperform the global average pace of growth.
Now the economy is beginning to look much different. Demand is slowing, supply chains have recovered, the pandemic has subsided and unemployment benefits have normalised.
The expectations for short-term inflation are still relatively high, but much of this probably reflects the surge in commodity prices and should wane if those prices level off. There are already signs in the US that this is happening.
The key to it all could well lie with China where recovering consumer consumption could lead the economy to a modest recovery next year.
“We’re forecasting 5 per cent growth in 2023, with most of that coming in the second half of the year, when the economy is expected to fully reopen following the repeal of Covid-zero policies early in the year,” said Robin Xing, chief China economist at Morgan Stanley.
Billionaires may take a hit
Even for the world’s billionaires — there are 2,668 of them, according to Forbes — times can be tough, and 2023 doesn’t look like being any better for the planet’s financial titans, many of whose fortunes are wrapped up in big tech.
Take for instance Elon Musk, who bought Twitter and, in doing so, saw his wealth, much of it tied up in his Tesla stock, nosedive to $168.5 billion, according to the Bloomberg Billionaires Index. He is no longer the world’s richest person.
Critics will say much of Mr Musk’s financial pain has been self-inflicted as he sells off tranches of his Tesla holdings to help pay for his Twitter fixation, where tens of thousands of employees have been laid off and former US president Donald Trump allowed back on after being barred for almost two years for risk of incitement of violence.
With electric car makers around the globe fast making up ground on Tesla, whose share price more than halved in 2022, investors seem to think that he’s taken his eye off the ball with his purchase of Twitter.
The portents do not bode that well, at least in the short term. His difficulties are all relative, however, and if the going gets really tough he could easily launch himself off in one of his Space X rockets.
Usurping Mr Musk at the top of the financial tree is the ultra-high net worth Bernard Arnault, chief executive of the Louis Vuitton fashion group. In the post-pandemic world, people have been more than happy to spend, spend, spend their way out of the gloom and Louis Vuitton has been well-placed to cash in.
Nothing suggests that trend will change in the next 12 months. After all, their customers do not tend to be troubled by such trivialities as inflation.
Mr Arnault according to Forbes is worth $178.5bn. He controls about 60 per cent of LV Group through direct holdings and family trusts.
Broader stocks of tech companies including Meta, Microsoft, Apple and Google, which accounts for a mind-boggling 92 per cent of internet searches, and even Amazon have suffered.
The arrival in December of Chat GPT from San Francisco’s Open AI has led some to predict the demise of Google There has been rationalisation with jobs cut and costs slashed as revenue come under threat. The question is how far this will carry over into 2023 and will the pain continue? On that, no one can be certain.
Travel bounces back
The barometer that best measures the health of the global travel industry is the performance of the major airlines. And for them, the rebound from the pandemic has been pronounced.
In the US, Delta expects earnings to almost double in 2023 thanks to robust travel demand. American Airlines, United and South Western are also set to record growth.
Clear skies seem to lie ahead. Investment banks such as Morgan Stanley are bullish on airline stocks.
That is a remarkable transformation and good news for airlines such as Emirates and Etihad in the Middle East. Two years ago, the obituary for the Airbus A380 — the biggest plane and with a passenger load of 680 — was being written.
Nearly half the A380s ever sold have been bought by Emirates. They own 119 and 74 are back in active service. By next spring the airline's entire fleet will have returned to the air having been refurbished.
When they’re back, Emirates will turn to its 50 Boeing 777s. The outlook is so positive Tim Clark, president of Emirates, urged Airbus to consider building an even bigger jumbo jet.
Emirates started flying the A380 six times a day into Heathrow a year ago and Mr Clark said there hasn’t been a free seat on any of them since. In the meantime, the airline is undertaking the world’s largest known fleet retrofit that among other things will see 4,000 new premium economy seats, the size of which will match many the business class offerings of other airlines.
Having gone extensive “open-heart surgery”, according to its outgoing chief executive, Etihad is poised to bounce back in spectacular style, with the announcement in December that they too will be bringing back of their A380 fleet complete with its award-winning luxury cabins.
In Europe, Ryan Air is still the market leader and in the first half of 2022 reported record profits of £1.2bn. Michael Ryan, its chief executive, expects high demand for air travel on the continent and has expanded may of its routes out of British airports.
Demand for business travel and meetings is “back with a vengeance”, according to Patrick Andersen, chief executive of CWT, a leading management company.
The cruise industry is also anticipating a significant recovery in 2023 with 26.5 million passengers. The Cruise Lines International Association expects pre-Covid numbers to be surpassed by the end of 2023. In 2022, according to Clarkson Research, 310 ships were in service worldwide in July, 93 per cent of capacity — in 2021 half the fleet was lying idle at anchor. The Economic Intelligence Unit forecasts a 30 per cent increase in 2023.