Financial Consultant and CEO of Profit Jumpstarter, Keisha Bailey, says China’s reopening could significantly impact the global economy in 2023.

Speaking on Taking Stock with Kalilah Reynolds, Bailey noted that the reopening of the world’s second-largest economy will bring more demand into the marketplace. 

After three years, China on Sunday reopened its borders and ended the requirement for incoming travellers to quarantine. 

China’s zero-COVID policy was one of the strictest pandemic regimes globally. The country also closed several factories, leading to a shortage of some tech components. The shutdown led to China experiencing its slowest growth in nearly 50 years. 

Game changer

“I think one of the biggest game changers for this year will be China reopening. Overall we could trend higher this year largely because of that. I think that’s going to bring a lot of demand back into the global economy,” Bailey said. 

She noted that 2022 was a rough year for many financial assets, and as such, the outlook for 2023 is more optimistic, but there are still several variables that could impact economies.

For instance, China’s reopening has led to a surge in new COVID-19 cases and the possible emergence of a new variant. The resurgence caused several countries, including the United States, to put restrictions on travellers from China.

“There’s also been a lot of talk about a recession in the US…. It might be very mild but we could still see one before things start looking better,” she said. 

The US economy suffered two consecutive quarters of negative growth last year, however, officials said strong performance in the labour market stopped the country from entering a recession. 

Finally, Bailey noted that the Russia/Ukraine war, which is approaching its first anniversary, is still a huge factor to consider. The war caused oil prices to soar last year, hitting decade highs before falling throughout the year. 

She noted that war shows no sign of stopping, and aggression could increase at any moment, sending ripple effects across global economies.

Sectors to watch in 2023

Energy and pharmaceuticals were the two top performing sectors on the US stock markets last year.

Bailey said she expects those sectors to continue their robust performance into 2023.

She explained that the war in Eastern Europe was one of the main drivers behind the growth in the energy sector in 2022.

Russia provided one-third of the world’s oil supply. The war and resulting sanctions on Russia caused oil prices to skyrocket. 

The CEO said that high oil prices coupled with increased travel as pandemic restrictions eased, along with a harsh winter, boosted many energy companies. 

“That was the only sector of the US market that was in the green for the year. I suspect that may make up into this year because now we have China reopening,” she said.

Bailey added that the increased demand from that region will impact the global economy.

More travel may also influence the pharmaceutical sector, Bailey said, as there may be another surge in cases as global travel restrictions ease further.

Tech iffy

However, Bailey is still unsure about the tech sector.

“The thing with tech companies is the valuation. A lot of the tech companies ran up in 2020 and a lot of them were overvalued, so they took the biggest part of the hit last year,” she said.

She admitted that AI and machine learning may grow in popularity in 2023.

“But the tech sector as a whole still has a lot of challenges because the valuations still are high. We may see pockets of opportunities but we’d need to find the AI companies that are attractively valued,” she said.

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