The 9th drupa Global Trends Report confirms a remarkably positive outlook for an ever-resilient Printing Industry that has just bounced back from COVID-19 pandemic. The newly released EXECUTIVE SUMMARY (which forms this edition’s COVER STORY) examines how this year’s results of both emerging markets and developing economies have not only maintained momentum with a further improvement in sentiment for 2023 but also highlights statistics of a very positive expectations for 2024 :- a clear testament of increasing confidence across almost all regions and markets. Excerpts:
The findings from the 9th Global Trends In-Depth Survey, run this spring by Printfuture (UK) and Wissler (CH), where over 600 Printers and Suppliers (from the drupa Expert Panel of Senior Decision Makers participated) confirm that this year have maintained a stable momentum, with a very positive expectation for 2024.
drupa Printer Barometer 2023 economic confidence by region
It indicates that globally in 2023, 44% stated their company’s current economic situation was ‘good’, and 12% described it as ‘poor’ while the remaining 44% described it as ‘satisfactory’. The net positive balance being +32% i.e. 44% minus 12%, is the overall result shown as the green column in the chart, 14% better than in 2022. It is this net positive or negative balance that is shown in many of the charts that follow. Meaning, amongst Printers, almost all regions and markets were more buoyant than 2019, i.e. before COVID pandemic.
It is not all good news. Germany was downbeat at +12%, the same as 2022. Yet, the Rest of Europe was +34%. North American (N. America) sentiment softened to +50% from the peak last year. However, South/Central America (S/C. America) +24%, Africa +34%, Middle East +52% (small data set) and Australia/Oceania +56% (small data set) all recovered well from previous lows. Looking ahead, all regions, except Australia/Oceania, expect better performance in 2024, although Germany at just +4% is far more cautious than most.
Looking at markets, there is a striking recovery in confidence amongst Commercial and Publishing Printers across the globe, while Packaging continues in its confident fashion. The unexplained dip in confidence for Functional Print in 2022 is reversed – probably a result of the small data set.
Suppliers were a little more cautious this year than last at 32%, down 2%. N. America, S/C. America and Asia were up, with Europe down 5%. All markets were fairly flat this year, but all showed great confidence for next year, perhaps in part because of drupa 2024!
For the second year running, Printers raised prices globally; this after seven years of falling prices. Revenues grew at the fastest rate by far and margins decreased at the slowest rate ever recorded. The pattern was not universal, with Europe and S/C. America reporting a more mixed situation. Suppliers reported a similar upbeat assessment.
Commercial pricing is strong, net balance average +57% for the last two years compared with an average of -21% 2013-2017. Publishing is also an average +57% last two years; average -18% 2013-2017.These figures suggest the beginnings of better times for both market sectors. The stronger financial performance for the industry as a whole is welcome, as long as it does not crumble under wider inflationary pressures.
Every year we ask Printers to assess the net print volume by print technology. Chart D shows this year’s results for the main print processes in total and by main market sectors. The resilience of sheetfed offset is remarkable with net growth in all markets, even commercial after a number of years of reductions. Flexo grows fast in packaging and Digital toner cutsheet colour is far ahead of all other digital processes in all markets.
Globally, the digital adoption rate – Printers claiming more than 25% of turnover in digital – is growing from 26% in 2014 to 29% in 2023. At first sight this is only a modest growth. However, according to various industry sources volumes have grown significantly since 2014, even though the digital adoption rate appears to be slowing down.
25% of the total Printer panel reported having web-to-print installations in 2014. The figure for 2023 is still 25%. Some regions have less e-commerce for cultural, technical and other reasons but the figure is flat almost everywhere. Those operating web-to-print enjoyed a surge in demand from that source over the COVID period, but demand has fallen back this year almost to pre-COVID levels. The exception is Packaging where the major growth of 2022 has been largely maintained.
Employment numbers amongst Printers are flat in the developed economies, but show significant growth elsewhere. Labour shortages are reported by both Printers 47% and Suppliers 39%. Conventional press operators and finishing staff are hardest to recruit for Printers and manufacturing and technical support staff amongst suppliers. Supply chain issues have loomed large for both Printers 63% and Suppliers 73%, although all expect issues to be less next year.
Capital expenditure fell back during the pandemic and there was an inevitable lag last year but demand picked up strongly in 2023 with even higher forecasts for next year, drupa 2024! There was the expected sustained demand from Packaging Printers, and an encouraging surge from Commercial and Publishing Printers, while Functional Printers retuned to levels not seen since 2018. As usual, print technology and finishing equipment are the strongest targets by far.
Sheetfed offset remains first choice for print technology globally and has been since the first Trends report in 2014. Digital presses take the next two places for popularity, as shown on the table below. There is more variety when analysing the market sectors, signaling the amazing range of products and market conditions that together dictate best investment choices.
Building sales channels, raising efficiencies and developing new services are the preferred targets. Both printers and suppliers have increasingly relied on diversification to create growth, though the rate of change is slower as trading has returned to more normal patterns post-COVID.
Socio-economic issues loom as large as ever over all regions. The risk of economic recession is the top concern 47%, knocking the impact of pandemics into second place 41%. However, beyond the top two issues there were major variations across almost every region. For example, S/C. American Printers were concerned about Political instability 52%, African Printers highlighted currency issues 51%, Australian Printers pointed to environmental issues 33%, Asian Printers commented on trade wars 23% and N. American Printers worried about standards of living 32%. Opinion is divided between those that think market forces are more important 43% and those who think socio-economic forces 46%.
We returned to market specific questions for the first time since 2019. For commercial markets, the key takeaway is the advantages of diversification in both markets served and services offered. The proportion of publishing Printers in the sample has halved since 2014 (from 30% of the total 2014 to 15% in 2023). And the mix of markets they serve has also changed, with fewer in the newspaper, magazine and catalogue markets but more offering varying book printing options.
Packaging Printers report increasing demand for added value packaging e.g. interactive print. The search for more environmental alternatives to plastic packaging is a major focus for many, particularly for Flexible Printers of course. While our sample of Functional Printers is small, the shift to inkjet print from screen and toner is clear.
In conclusion, the majority of Printers and suppliers across the globe have increasing confidence for the future, despite the many market and socio-economic risks and challenges. Prices and revenues are up strongly and the squeeze on margins is less than ever. The question is whether the industry will remain as positive in the face of inflationary pressures.
Perhaps the most encouraging news is the clear improvement in confidence amongst Commercial and Publishing Printers, who appear to have adapted to the impact of the digital revolution and can plan forward with greater confidence. Meanwhile Packaging Printers enjoy sustained demand and Functional Printers continue to enjoy an astonishing and ever-growing variety of products and markets served.
Capital expenditure has recovered to pre-COVID levels and 2024 is forecast to be a bumper year for investment – good for drupa 2024!
The Global Economic Outlook 2023 – Living Through Turbulent Times
We need to remind ourselves how different the first three years of this decade have been in comparison with the 2010s. The world endured a once-in-a-century pandemic, which governments countered by shutting down whole areas of the global economy and provided unprecedented monetary and fiscal stimulus. These actions combined with the cost of restarting the global economy and restoring supply chains, fuelled the biggest and most sustained surge in global inflation in over 40 years. Central banks had to respond with the most aggressive global interest rate rises in decades.
The consequences included a banking crisis, tighter credit conditions, and widespread forecasts of a recession this year or next. These events will likely reverberate around the global economy for years to come. More frequent and more volatile business cycles are expected and governments will have less scope to administer regular doses of quantitative easing. It is likely we are entering an era of constraints on supply and economic labour market shifts, which will become regular sources of economic fluctuations and risk management.
The economic aftershocks
The world economy has been severely weakened with marginal economic growth, stubborn inflation and rising interest rates in the major developed economies. This is clouding the near-term economic outlook and creating uncertainty.
Having to deal with the legacy of COVID-19, the protracted war in Ukraine and the accelerating impact of climate change, have all impacted growth prospects. Global growth has slowed from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023 but is projected to reach 2.9% in 2024. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global growth is projected to remain at a below-trend rate in 2023-24, with inflation falling gradually as the tightening of monetary policy takes effect. Growth has slowed to the extent that the global economy is perilously close to falling into recession.
Major economies are undergoing a period of pronounced weakness. Globally, public debt as a share of GDP continues to be notably higher than before the pandemic, although the gap has narrowed in the last two years, largely due to a withdrawal of fiscal support and some growth recovery. The lowering price of commodities and the full reopening of China are cause for some optimism but the growth benefits will be limited to the near-term future.
Growing optimism in emerging markets
However, the emerging-market economies in Asia are likely to be less affected by the global slowdown, helped by the rebound in China and more moderate inflation pressures. Growth in China is projected to rebound to 5.3% this year, before easing to 4.9% in 2024. India’s growth is projected to be around 6% in FY 2023-24, amidst tighter financial conditions, before recovering to around 7% in FY 2024-25, while Indonesia’s economy will continue to expand by between 4.7-5% per annum over 2023-24. Growth in many other emerging-market economies, including Brazil and South Africa, is projected to be sluggish over the next two years, at about 1% per year on average.
Economic growth in Turkey is being hampered by the recent earthquakes, but will recover as reconstruction spending picks up, with predictions of full year growth of 2.8% in 2023 and 3.8% in 2024. Output in Russia is expected to decline this year and next, as the drag from economic and financial sanctions starts to build liabilities and external revenues.
Developing economies face an uncertain future
The slight improvement in the major economies is not reflected in the prospects for many developing countries. Many emerging-market economies are facing increasing difficulties in servicing elevated debt and deficits as global interest rates rise, especially in commodity-importing economies or ones in which there is a mismatch between the currency composition of liabilities and external revenues. Quantitative easing and excess global liquidity in the decade before the pandemic were associated with sharp increases in external debt in a large number of developing countries.
Average GDP per capita in Africa and Latin America and the Caribbean is projected to grow only marginally, reinforcing a longer-term trend of stagnating growth performance. Through this year and the next, growth is expected to remain well below the average rate of 3.1 per cent registered during the two decades before the pandemic. Low investment growth, high external debt burdens and vulnerabilities, unpredictable geo-political and climate risks will all lead to a prolonged period of poor growth prospects.
The shift to quantitative tightening, along with higher interest rates, is exerting downward pressures on exchange rates of many developing countries, especially those facing the risk of capital outflows, adversely affecting balance of payment and exacerbating their debt sustainability risks. Low economic growth and increasing financing constraints will further limit the ability of governments to invest in education, health, sustainable infrastructure and energy transition to accelerate progress towards sustainable development.
Low-income economies are particularly at risk of debt distress. IMF (International Monetary Fund) debt-sustainability analyses for low-income countries suggest that over half of the 69 economies assessed were either experiencing debt distress or at high risk of distress as of January 2023.
Light at the end of the tunnel
With global economic growth slowing, energy and food price inflation subsiding, and monetary policy tightening by most of the major central banks, consumer price inflation is expected to moderate. Headline inflation is projected to decline in 2023 and 2024 in almost all G20 economies.
Even so, annual inflation will remain well above target almost everywhere through most of 2024. As countries battle crises on multiple fronts, it is crucial not to overlook the long-term challenge of improving their resilience to future shocks in order to achieve sustainable and consistent growth. One of the biggest future shocks is likely to come from climate change, which imposes large economic and social costs and every country needs to plan for the challenges ahead.
After the turbulence of the last three years there are signs that the storm is abating and we are over the worst. Even during these unprecedented times many companies have refocused, adapted and not just survived but thrived. These companies are now stronger, more resilient, more efficient and better equipped to grow in the future. Some companies and market sectors will be changed forever, but constant change, thinking ahead and managing risk is a fundamental attribute of any successful business. Printing has undergone enormous change over the last twenty years with the migration to digital print and digital media services, which proves its resilience and ability to adapt to fluctuating market demands in the future.
SUMMARY
- Higher prices bring more confidence
The source of such confidence across all markets is clear from the financial performance figures provided. Globally, 50% more Printers raised prices in 2023 than lowered them, sustaining the pattern of last year, after the previous seven years of falling prices. Better revenues and margins have followed. This pattern was true across all markets, although there were regional variations.
- Digital adaption is growing
The resilience of Sheetfed offset print volume across all markets is remarkable, matched amongst Packaging Printers by growth in Flexo. Digital toner cutsheet colour print volume remains the leader among digital print technologies. Globally, the digital adoption is growing from 26% in 2014 to 29% in 2023. At first sight this is only a modest growth. However, various industry sources show volumes have grown significantly since 2014 even though the digital adoption rate appears to be slowing down.
- Good prospects for investment
Capital expenditure tumbled during COVID, recovered a little last year and accelerated this year with 27% more Printers investing more in 2023 than those who reduced expenditure; a better global figure than any year since 2017. An even higher investment rate is forecast for 2024, by both Printers and Suppliers. In general, print technology and finishing remain the most popular targets, with sheetfed offset and digital toner cutsheet colour being the most popular technologies globally, though there are significant variations by market.
Strong industry growth forecasts must of course be balanced by recognition of stiff economic headwinds, with the risk of recession, or at least damaging inflation, now outweighing the impact of the pandemic and a wide variety of more specific regional socio-economic concerns.
Sabine Geldermann, Director drupa and Global Head Print Technologies at Messe Duesseldorf, commented: “Printers and Suppliers know they must innovate to succeed in the longer term. I am confident that drupa 2024 will be the ideal opportunity to explore how best to achieve this objective.”
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