The economic outlook for 2023

7th April 2023
Inflection points for inflation, interest rates and economic growth have a resulting effect on luxury sectors. Following a period of global economic uncertainty, Camper & Nicholsons speaks to multinational investment bank UBS about its economic forecast for 2023 and considers what this means for the superyacht industry.

Mark Haefele is Chief Investment Officer at UBS. He oversees a team of 800 investment specialists across 18 financial hubs, allowing him to make the final call on two trillion dollars of invested assets. As such, his economic forecasting acumen is the closest thing the financial markets have to a crystal ball. 

Haefele’s latest economic report recalled 2020 as “a year of infections”. He described 2021 as “a year of injections” as advanced economies infused money into the financial system while healthcare workers vaccinated five billion people. In 2022, the knock-on effect was “a year of inflation” as post-Covid economies bounced back and labour markets tightened. 

And 2023? “The year of inflections,” says Haefele. It’s when the economic curves change direction — this time for the better. Inflation is forecast to level off. While the high interest rates used to choke rising prices should plateau, then fall. The most probable base forecast by UBS has the Federal Reserve, Bank of England and European Central Bank completing “their hiking cycles in the (first quarter of 2023), or Q2 at the latest”. Similarly, global output will slowly curve upwards. 

A wider range of sources suggest that the post-Covid recovery won’t be even. Asia, the wealthiest, most populous and most diverse continent, should lead the way. Free trade agreements and competitive costs have led the IMF to forecast average economic growth of around 4% across the continent. Camper & Nicholsons has placed itself in prime position with the opening of a Singapore office in 2023. Rapidly industrialising Vietnam is predicted to top Asia’s economic growth table. The Vietnamese have even started building superyachts near Ho Chi Minh City – a statement unthinkable a decade or two ago. 

In 2023, the United States might experience a downturn, but not a recession, say varied sources. During 2022, a strong dollar, funded by high federal reserve rates, increased Americans purchasing power for Euro-priced products by up to 10%. A significant figure when buying a superyacht from an Italian or Dutch yard. And, according to UBS, the dollar will remain stronger for longer. 

Conflict in Europe and resulting fuel shortages stymied growth in 2022. Despite economic headwinds, however, Europe remains the undisputed leader in yacht production. Skills honed over centuries render Italy, Germany, Holland, Turkey and Norway the top five yacht building nations respectively, in terms of total gross tonnage. A weaker euro also helped sales.

While the luxury yacht industry remains one step removed from everyday economic influences, Vanessa David, governance, legal and compliance director at Camper & Nicholsons, is interested how the dichotomy of uncertain geopolitics and a post-Covid travel boom will materialise. “There are two approaches,” she considers. “Yachting will not be excluded from economic instability, but we have witnessed a will to purchase and charter because consumers don’t know if they will be able to travel tomorrow.” A concurrent trend is that yachts can navigate away from uncertain areas to safe havens. They can also be converted to mobile offices, luxury refuges or whatever function suits future needs. 

And the market in general? “With the recent drop of the euro, our yachts listed in Europe have definitely become attractive,” says David. “The Asian market is also growing, especially in the new build segment.” Whatever the forecast, Camper & Nicholsons has proven itself capable of navigating any economic current since 1782.