Welcome to the Year Ahead Energy Holds the Balance of Power Coming into 2022, our focus – and that of global markets – was squarely on the shape of the post-pandemic economy. Businesses and investors faced a world of shortages and tectonic shifts in central bank decision-making. Governments grappled with how quickly to pull on the fiscal levers and allow consumers to regain their pole position as the engine of growth. All of this led us to argue at the time that shortages and supply chain disruptions would persist, causing central banks to be even more hawkish – and that both of these factors would drive markets to a far greater degree than most appreciated. Looking back, it seems as though even we may have underestimated just how influential these factors have been for markets and the global economy. As an untameable virus gave way to untameable inflation, tightening the screws on global policymakers, markets saw (and continue to see) a fair share of fits and dizzy spells, all exacerbated by the war in Ukraine. From goods to services to labour and, perhaps most acutely, to energy, the supply side of the economy has rarely been so disrupted, or indeed disruptive to the outlook. It is the last of these – energy – that commands our attention this time around. Lower energy prices in 2023 could provide a path for a global economic soft landing by insulating consumers and businesses from the most detrimental of cost increases; it could dissuade inflation-targeting central banks from keeping interest rates prohibitively John Briggs high for longer. Sustained higher energy prices, on the other hand, would result in Global Head of Economics ongoing stagflationary risks to the global economy and tighter monetary policy for and Markets Strategy longer, sapping consumption and business investment – including into the energy sector itself. Naturally, many variables will determine the course of the world in 2023. But we expect the outlook for energy to be a significant, possibly dominant, factor. That’s why it’s core to the four key themes we explore in the Year Ahead 2023: 1. Finding the Energy: The Outlook for 2023 2. Moving Beyond Gas-Fired Inflation: Prices & Monetary Policy in 2023 3. Fuelling the Fire: Geopolitics in 2023 4. Restarting the Energy Transition: The Nuclear Option As we look ahead to 2023, the challenges facing the global economy are daunting but not insurmountable. In these pages, we lay out our views on how key themes will shape markets and the economy, fully anticipating that the outlook will present not just unforeseen challenges, but also opportunities. We look forward to working with you as a partner to understand, analyze, and thrive through a period of uncertainty. John Briggs For any terms used, please refer to this glossary The Year Ahead 2023 | 3