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FDI - What’s In Store In 2022? A Sector-By-Sector Outlook

Hopes are high for a robust rebound in foreign direct investment flows after a volatile two years, with Investment Monitor predicting 6% growth in greenfield FDI in 2022 as many key sectors head towards recovery.

How have leading sectors been impacted by the pandemic, and more importantly, what are their future prospects? The editors of our sister publications outline their expectations below.


Apparel

The pandemic has brought every supply chain, including apparel, under the spotlight like never before. On the plus side, it has encouraged stronger buyer-supplier relationships, greater transparency and advancements in technology that will continue to be a focus moving into 2022.

With the new Omicron variant likely to sweep across the world in time for the new year, the apparel industry will need to use its new-found tools to deal with ongoing supply chain challenges as well as delays caused by the global shipping crisis. Earlier in December, the US announced the bipartisan passage of the Ocean Shipping Reform Act of 2021. However, the American Apparel & Footwear Association pointed out it could take months to unblock the bottlenecks within the supply chain.

In 2021, sustainability saw a big push with COP26 front of mind; however, the fashion industry once again came under fire for being one of the world’s big polluters. Next year will see fashion brands, retailers and every aspect of the supply chain opting for more sustainable processes and end products. The wider industry, however, will now realise that words and futuristic action plans will not be enough as end consumers will want to see ambitions being made into reality sooner rather than later.

A combination of pandemic-related supply chain challenges and concerns over sustainability will make nearshoring and sourcing closer to home a key trend next year and beyond. Turkey is a sourcing destination to watch in the coming months as it is perfectly situated for EU countries that want to shorten their supply chains and it has focused on digitising its entire supply chain in recent years, which will give it the essential resilience factor.


Automotives

GlobalData forecasts that the global light vehicle market in 2021 will total 79.9 million units, just 5.5% ahead of 2020 (75.7 million), with the chips crisis and resultant supply shortages this year taking about four million units out of sales.


The auto industry is used to being demand-led, but supply-side issues will continue to shape the market in 2022 even as the situation eases through the course of the year. The current lack of momentum in the global light vehicle market is expected to continue into the first half, but with build-back by vehicle makers mounting as we progress through the year and supply chain issues related to semiconductors ease.


The outlook for 2022 is for the global light vehicle market to grow to approximately 84 million, but supply and demand issues – as well as ongoing pandemic risks – point to a continuing fragility to the auto industry’s recovery next year. At 84 million units we are still not quite back to pre-pandemic levels – that threshold is expected to be reached in 2023.


Beverages

Alcohol is a lucky industry: consumers consume when they are happy and they consume when they are sad. Whatever 2022 has in store, then, does not necessarily bode ill for alcohol brand owners. However, consumer trends such as premiumisation will continue to take a back seat – particularly as supply chain and inflationary pressures are felt. Throw in a whole sales channel – the on-premise – that won’t be in a position to rely on being allowed to trade tomorrow for some months to come, and alcohol’s dream of ‘revenge conviviality’ will remain a dream, while consumers stick to what they know in the comforts of their own homes.

For soft drinks brand owners, the focus in 2022 will be on sales channels – how best to get your drinks into your consumer’s hands. The Coca-Cola Company’s acquisition of Costa in 2019 may have been bad timing, but the direction of travel is a longer-term win. With continued pressures on on-the-go consumption and the on-premise, soft drinks companies will exploit direct-to-consumer opportunities in the year ahead. Meanwhile, the plastic crisis shows no signs of abating, with soft drinks in the line of fire. The sooner brand owners understand that putting the responsibility to recycle on consumers’ shoulders is not a good look, the better those companies can focus their efforts next year on more environmentally friendly moves, such as compostable bottles at scale.


Defence

Military technology was dominated by several broad themes in 2021, and many of these will continue to be the focus in 2022. Global Defence Technology asked industry experts for their forecasts on the themes of sustainability, cybersecurity, policy and cloud for the year ahead.

Defence organisations will rapidly increase their efforts to reduce their impact on the environment and climate change, and we are already seeing strong commitment across the sector. This will be challenging; a net-zero strategy cannot come at the cost of the ability to develop capabilities that can combat the sophisticated threats in the world today.

We will see cyberattacks spanning further outside of the extended network, even into space. Governments around the world will continue to take a more active role in cyber defence during 2022.

In terms of policy, 2021 saw defence constantly reshaping and reprioritising in line with world events. These require a more globally engaged and responsive military, operating in a multi-domain framework, but often with smaller teams, such as the British Army’s new Ranger organisation, working with local forces.

Cloud’s scalable and processing capabilities are likely to enable the defence sector to turn huge amounts of data into useful insights within a reasonable time.

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