According to a report by Motilal Oswalhe health care Manufacturing and the economy are expected to benefit the most from the Fed’s decision to lower interest rates, indicating strong growth prospects in the coming months.
The report highlighted that the health sector It will be the fastest growing vertical sector over the next 12 to 18 months. Despite being largely agnostic regarding rate cuts, the healthcare sector is expected to thrive due to its minimal threat of internalization.
The report suggested that healthcare resilience, coupled with demand for innovations in biotechnology, clinical research and Digital Health Solutionswhich positions it as a key beneficiary of upcoming rate cuts.
“The healthcare sector will be the fastest growing sector over the next 12 to 18 months. The sector is largely agnostic to the tailwinds of rate cuts,” the report said.
Another sector, manufacturing, also stands out for its high growth potential, particularly due to the technological advancements it could adopt during the rate-cutting cycle. The report noted that lower interest rates are expected to spur investments in technology, further accelerating the industry’s recovery. Although the sector faces some challenges, such as limited penetration of IT services in Europe, the report identifies opportunities in technologies such as generative artificial intelligence (GenAI), digital twins, IoT and connected factories. “The manufacturing sector also shows strong arguments for recovery; a rate-cutting cycle will spur investments in technology, and the threat of insourcing here remains quite low,” the report added.
However, the report also pointed to challenges facing the banking, financial services and insurance (BFS) sector, which faces significant threats from internalisation despite the positive effects of rate cuts. While there is some pre-GenAI spending in BFS, adoption of GenAI solutions may be slower in this sector due to the complexity of enterprise-wide transformation.
The report notes that “BFS is enjoying the positive effects of rate cuts, but faces significant challenges due to a serious threat of internalization, which limits its recovery potential.”
Retail trade, on the other hand, is expected to benefit from the rate cuts as rising consumption in customer markets, particularly in the US, is expected to boost growth.
The report highlighted that the sector could shift its focus from cost-cutting strategies to revenue-generating initiatives.
Finally, the high-tech sector ranks fifth in terms of benefits from rate cuts, according to the report. While rate cuts may have a moderately positive impact on the sector, the threat of insourcing remains high. Many software companies are expected to maintain tight control over their intellectual property, limiting opportunities for suppliers.
Overall, the report identifies healthcare and manufacturing as the key sectors that will benefit from the US Federal Reserve’s expected rate cut, while highlighting opportunities and challenges in the financial services, retail and high-tech industries. (ANI)
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