“Economic Outlook 2023” draws on a multitude of public and proprietary data sets, as well as models that are intended to estimate economic activity. The report explores four themes that will continue to shape the global economic environment— high interest rates and housing, trading down and shopping around, prices and preferences, and shocks and omnichannel.

After years of a housing boom, higher interest rates are expected to squeeze cost of living budgets, shifting the way consumers spend broadly. In major developed countries, it is expected that housing-related spending as a share of goods to fall an estimated 4.5 per cent over the course of 2023, below pre-pandemic levels.

In the United Kingdom, housing related share of spend decreased by 1.4 percentage points in 2022 versus 2019. Meanwhile, in Thailand, housing related share of spend decreased by 1.5 percentage points in 2022 versus 2019.

Broad spending should remain resilient in the face of inflation, with consumers choosing wallet-friendly brands and chasing the best value. Globally, grocery shoppers made 31 per cent more trips to the store this year compared to 2019 – partially to reduce food waste – while their average spend per visit is roughly 9 per cent lower.

As of September 2022, consumers in Germany increases their grocery shopping trips by 23.1 per cent compared to September 2019 but spent 14.5 per cent less per visit. Meanwhile, as of September 2022, consumers in Indonesia increased their grocery shopping trips by 35 per cent compared to September 2019 but spent 3.1 per cent less per visit.

As food and energy costs eat up a greater share of the consumer budget, lower-income households will feel an especially strong pinch. From 2019 to 2022, there has been discretionary spending by high income households grow nearly 2x as fast as lower-income households. However, much of this gap will diminish with the normalisation in inflation. The Economics Institute expect inflationary pressure to ease next year, with the average inflation rate of developed economies falling from 7.1 per cent on-year in Q4/2022 to 3.1 per cent on-year in Q4/2023.

In Vietnam from 2019 to 2022, discretionary spending for affluent cardholders grew 124.9 per cent while discretionary spending for non-affluent cardholders grew 43.3 per cent

Businesses with an omnichannel presence are likelier to withstand shocks by meeting the customer where they want to shop. Analysis suggests that having a multichannel presence provided 6-percentage point lift in retail sector sales through 2022.

Small and large restaurants were saved from losing an additional 31 per cent of sales during the height of lockdowns with their omnichannel presence. Similarly, small omnichannel clothing stores outperformed online-only and brick-and-mortar-only firms, growing 10 per cent and 26 per cent faster, respectively.