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Industry roundup: 16 March

Forecasters raise the probability of a US recession as Fed set to hike interest rates by 25 basis points

The US Federal Reserve (Fed), the central bank of the United States, is set to raise interest rates today to address the soaring inflation over the past year at its highest rate in four decades. Rising energy, food, housing and service prices pushed US inflation to jump 7.9% over the past year.

This week, CNBC’s Fed Survey – which gauges the opinions of fund managers, strategists and economists – put the probability of recession in the US at 33% in the next 12 months, up 10 percentage points from the 1 February survey. The latest survey predicts the chance of a recession in Europe at 50%.

While a recession is seen as a greater possibility than in February, it’s not the case for most of the survey respondents. The average GDP forecast in the survey for this year slipped by 0.8 percentage points but remains at a slightly above-trend 2.8%. In addition, the GDP forecast for 2023 dropped by about a half a point from the last survey to 2.4%.

The survey respondents forecast, “The Fed will raise rates an average of 4.7 times this year, bringing the funds rate to end the year at 1.4% and to 2% by the end of 2023.” Nearly half of the respondents see the Fed hiking interest rates five to seven times this year.

Amid the uncertainty prevailing over Russia’s invasion of Ukraine, the Fed is expected to raise interest rates for the first time since 2018 to curb rising prices and to maximize employment. Americans may soon see higher rates on everything from mortgages to credit cards. The interest rate changes will make borrowing more expensive for companies and consumers.

Business payments digitization to be fast-tracked by most CFOs

Most chief financial officers (CFOs) have fast-tracked their business payments digitization efforts since the pandemic began. 

The “Business Payments Digitization” survey of 400 CFOs from five industries jointly conducted by PYMNTS.com and Corcentric observed that 59% of CFOs consider payments digitization to be “very” or “extremely” important to improving their balance sheets.

The figure varies by industry. Seventy-one percent of the CFOs in the finance and insurance sector believe that payments digitization is “very” or “extremely” important to augmenting the health of their balance sheets. The share is around 60% in the healthcare and medical, travel and transportation, and retail trade industries. The interest is lowest in industrial and manufacturing industries, with 45% of CFOs expecting to benefit from the acceleration of the digitization of payment processes.

The survey findings indicate that the share of CFOs who have fast-tracked business payments digitization since the advent of the pandemic also varies by industry, ranging from a high of 85% in healthcare and medical to a low of 50% in the industrial and manufacturing industry.

These payments digitization advances have brought other benefits to their organizations, too. Between 19% and 48% of the CFOs have primarily fast-tracked their payments digitization efforts to improve their balance sheet health. Data security is the benefit cited by the highest share (94%) of CFOs in the finance and insurance industries, while employee satisfaction ranging from 74% to 86% is the benefit preferred by the greatest percentage of CFOs in the other four industries. 

In addition, CFOs across the five industries also say the transition to digital payments has had a positive impact on working capital, fraud reduction and supplier relationships. 

Blockchain in Banking and Financial Services Global Market Report 2022

Global blockchain in the banking and financial services market is expected to grow from US $1.17 billion in 2021 to $1.89 billion in 2022 at a compound annual growth rate (CAGR) of 61.9%, as per the findings in the recent "Blockchain In Banking And Financial Services Global Market Report 2022" published by Reportlinker.com.

The report states that the growth is mainly due to companies resuming their operations and adapting to the new normal while recovering from the COVID-19 impact. It predicts that the market is expected to reach $12.39 billion in 2026 at a CAGR of 60%.

Blockchain technology is defined as a digitalized and de-centralized public record of all transactions. It was designed to record everything of value and not just transactions.
As per the report, the main types of blockchain in banking and financial services are public blockchain and private blockchain. Public blockchain is a distributed ledger technology that requires no permission to join and interact with. The different applications include fund transaction management, real-time loan funding, liquidity management and others.

Blockchain in banking and financial services offers a wide array of benefits such as capital optimization, increased transparency, and reduction in fraud and operational costs.

As per the report, North America was the largest region in blockchain in the banking and financial services market in 2021, while Asia Pacific is expected to be the fastest-growing region in the forecast period.

Yale professor compiles list of companies withdrawing from Russia

Yale School of Management professor Jeffrey Sonnenfeld and his research team have compiled a list of companies that have withdrawn from Russia.

Since the invasion of Ukraine began, 400 companies have halted their Russian operations, according to the current list that is updated continuously by Jeffrey Sonnenfeld and his research team at the Yale Chief Executive Leadership Institute. The list reflects new announcements from companies in as close to real time as possible, even as certain companies continue to remain in Russia.

Originally conceptualized as a simple "withdraw" vs. "remain" list, the list of companies now consists of four categories: withdrawal (companies that have left), suspension (temporary curtailing of company operations while keeping options open for return), scaling back (reducing company activities), and digging in (companies defying demands for exit or reduction of activities).

The list, as claimed by Yale Chief Executive Leadership Institute, has been widely circulated across company boardrooms, government officials and media outlets as the most comprehensive record of this mass corporate exodus from Russia.

Download the list here.

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