2023 Outlook
Overall economic development1
At the beginning of the year, the International Monetary Fund (IMF) slightly raised its forecast for global economic growth in 2023. It now expects growth of 2.9% instead of the previous 2.7%. This figure is significantly lower than the previous year’s growth rate of 3.4% and below the long-term average of 3.8 % between 2000 and 2019. The global economy is anticipated to recover further in 2024. Global inflation is expected to drop from 8.8% to 6.6% this year.
The projected bottoming out of the economy this year is due to a number of positive surprises, most notably the higher resilience of many economies. As a result, the US economy could grow by 1.4% in 2023 instead of 1.0% as assumed in October, the euro area by 0.7% instead of 0.5%, and Asia by 5.3% instead of 4.9%. Negative world GDP growth, as often associated with a global recession, is not expected.
The low growth simultaneously reflects the central banks’ key interest rate increases to combat inflation, particularly in the developed economies, and the war in Ukraine. In emerging and developing economies, the declining economy was anticipated to bottom out as early as 2022. China’s growth is expected to accelerate as it reverses its zero-COVID policy. According to the IMF, both groups of countries will then gradually recover further in the course of 2024.
Prospects on sales markets
The firefighting industry follows economic developments with a gap of one to two years. Demand is largely defined by countries with steady procurement. However, elevated safety awareness following natural disasters also leads to increased investment in firefighting technology and equipment.
In 2023, slight growth should be possible for the global firefighting industry. Particularly in the developed economies, the willingness to invest appears to be high, even if the corresponding budget resources for preventive firefighting and disaster protection are reaching a ceiling in isolated cases. The decisive factors for production will be how long it takes for supply chains to stabilize and whether energy and raw material prices decline as forecast.
The North American market has started the new year with very dynamic demand, mainly attributable to extensive funding programs for emergency response and electric mobility, which also benefit fire departments. At the same time, the performance of industry sales will be largely dependent on the availability of preliminary products and labor. The market’s new supply prices will likely only be able to compensate for inflation this year. Unlike in Europe, for example, there is no issue of energy costs here.
Europe’s firefighting market is expecting stable new procurement in 2023. Despite price increases and some delayed projects, there has been no noticeable decline in demand in the core markets, and procurement intensity is particularly high in the D-A-CH region. Many of these projects involve the purchase of forest fire equipment and vehicles, and interest in electric mobility is increasing. The sector’s performance could be weakened if inflation rates were to rise again or subsidies were not extended and the budget situation of fire departments were to deteriorate as a result.
The weak state of the sector on the Asian firefighting markets will improve only slightly in the current year. This is due to the comparatively better economic outlook, the planning and construction of new airports and runways and postponed replacement purchases. Nevertheless, market volumes will continue to fall well short of the usual levels. In 2024, airport business could return to pre-COVID levels.
For the countries of the Middle East, demand is expected to be lower this year in view of a significantly weaker economic outlook for Saudi Arabia and oil production cuts in the OPEC. Nonetheless, a number of attractive projects should be ready for a decision in the industrial and airport business. In addition to local production, increasing attention is also being paid to alternative vehicle drives.
Revenues and result of operations
The increase in key interest rates in the fight against inflation and Russia’s war of aggression against Ukraine weighed on economic activity at the start of 2023. Economists are therefore expecting global economic growth of 2.9% in the current year, well below the previous year’s figure.
The firefighting industry, whose order books are full to bursting, lags behind the economic cycle. While it is expecting a slight increase in demand again this year, actual industry sales will depend on the further development of international supply chains. At the same time, the fixed price agreements customary for the tender business in the public sector will weigh on the profitability of all market participants.
Following a record level of incoming orders in 2022, the Rosenbauer Group has started the current financial year with a solid order backlog well in excess of one year’s revenues, and thus a great deal of confidence. Based on a further improvement in the supply of truck chassis, the Rosenbauer Group’s Executive Board expects revenues to exceed € 1 billion in 2023. The EBIT margin is anticipated to improve by around 4 percentage points compared with the reporting year.
1 IMF, World Economic Outlook, Update, January 31, 2023, World Bank, Global Economic Prospects, February 3, 2023.