Daily Update: November 28, 2023

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Generative AI Revives the Dream of the Metaverse

The metaverse has always been misunderstood. The development of 5G connectivity and commercially viable virtual reality gear awakened the world to the promise of rich and immersive 3D content. However, the metaverse, contrary to its name, is not a destination, but a direction of travel. Real-time online interactions continue to evolve, leading to ever more advanced industrial and enterprise applications. Generative AI could provide a step toward realizing a more immersive metaverse by automating the creation of digital environments. But the technology does not exist to realize the human dream of full virtual interaction. Ian Hughes, senior analyst at S&P Global Market Intelligence, and Sudeep Kesh, chief innovation officer at S&P Global Ratings, examined the intersection between developments in the metaverse and generative AI in their article, “Metaverse and Generative AI: Envisioning the Future of Human-Computer Interaction.”

S&P Global Market Intelligence does not expect that the metaverse will replace the existing internet. Instead, the internet will grow to have increasingly metaverse-like qualities as the technology evolves for shared, immersive and persistent 3D virtual spaces. While augmented reality and virtual reality are often associated with the metaverse, there are multiple ways to access and use 3D virtual environments. 

Industrial applications for a metaverse-ready internet will include the use of digital twins — digital representations of physical objects or environments — which allow for factories, facilities or processes to be simulated and tested virtually, saving money and time used for training. Already, the increasing use of collaboration and communication technology in hybrid work environments points to a future where interaction breaks out of the video square and virtual environments are shared. The experience of the COVID-19 pandemic transformed working styles and allowed many devotees of cubicle life to begin envisioning the advantages of virtual collaboration environments.

One of the major challenges of the metaverse is that the creation of immersive 3D virtual environments has always been time- and resource-intensive due to each object and surface needing to be designed by a person. To achieve 3D environments at scale, the games industry depends on an army of designers working in concert. Generative AI offers a solution to the challenge of designing environments at scale. Generative AI-driven image generation platforms such as DALL-E and Midjourney can generate a vast number of images from text or image prompts. 

The complexity of 3D environments doesn’t end with the design of surfaces. In industrial applications, for example, 3D environments require moving parts and responsive elements. Rigging is the technical name for the process wherein virtual designers define the joint structure and range of motion for elements. Sometimes, 3D objects are modeled first from physical objects using motion capture. But the potential of the metaverse to create digital twins or virtual process modeling cannot be dependent on prebuilt physical environments. Technologies already exist to turn 2D images into 3D objects, and some companies are already allowing users to generate 3D objects from a text prompt.

Discussions about the death of the metaverse have always been flawed. The metaverse is a wide-ranging concept that inspires the development of improving virtual environments. Generative AI will advance the creation of more immersive environments by simplifying the design process. 

Today is Tuesday, November 28, 2023, and here is today’s essential intelligence.

Written by Nathan Hunt.

Economy

Malaysian GDP Growth Improves In Third Quarter Of 2023

The pace of expansion of the Malaysian economy measured on a year-on-year basis has moderated in 2023 due to a number of headwinds, including the impact of high base year effects and slowing merchandise export growth. However, measured on a quarter-on-quarter basis, the Malaysian economy has shown improving growth momentum, with GDP growth rising by 2.6% q/q in the third quarter of 2023, after growing by 1.5% q/q in the second quarter of 2023 and by 0.9% q/q in the first quarter of 2023. Growth momentum has shown a significant turnaround compared with contraction of 1.7% q/q in the fourth quarter of 2022.

—Read the report from S&P Global Market Intelligence

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Capital Markets

This Week In Credit: Big Jump In Rating Actions

There was a sharp pickup in overall rating activity last week, with the tone more negative than positive. Notably, the health care sector saw net outlook bias jump to negative 17.7%. This week will be busy in terms of economic data releases. Key points of interest for markets will be flash consumer price inflation in the eurozone (Thursday), and the personal consumption expenditure (PCE) and core PCE price indices in the U.S. (Thursday), which will indicate whether recent strong deceleration in inflation is likely to continue. There will be third-quarter GDP numbers from Canada and revised numbers from Germany and the U.S., while China's official purchasing managers' index (Wednesday) rounds off the releases.

—Read the report from S&P Global Ratings

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Global Trade

Persian Gulf Oil Producers Hold Off On Embargo But Remain At Odds With US

Core OPEC members Saudi Arabia and the UAE, the first and third largest producers in the 13-member group, have so far rebuffed Iranian calls for an oil embargo against Israel amid the intensification of its war with Hamas, but analysts say that should not be interpreted as an olive branch towards the US. As OPEC+ ministers prepare to meet Nov. 30 to discuss 2024 output levels, the US will be watching to see how low the group will go to prop up the market.

—Read the article from S&P Global Commodity Insights

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Sustainability

Watch: COP28: The Challenge

What’s on the agenda for the UN Climate Change Conference, COP28? In the first in a series of three videos looking at the biggest themes for the event, S&P Global Commodity Insights sets out the scale of the challenge to cut emissions and rein in global warming.

—Watch the video from S&P Global Commodity Insights

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Energy & Commodities

Fuel For Thought: Resolving Pemex Challenges Key For Next Administration – Mexico Opposition Advisor

Mexico has many challenges in terms of energy, but the main concern for the next government should be to address the financial losses at the state oil and gas company Pemex and its declining production, as they threaten to hurt public finances and the country's credit rating, according to Rosanety Barrios, the newly appointed energy advisor to Xóchitl Gálvez, the main opposition candidate for the upcoming presidential elections of 2024.

—Read the article from S&P Global Commodity Insights

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Technology & Media

Listen: Next In Tech Episode 142: Customer Experience Shopping Extravaganza

As the holiday shopping season kicks into high gear, customer experience becomes an even more critical part of retail. Sheryl Kingstone returns to discuss data from recent studies with host Eric Hanselman. Customers are expecting better integration of their online and in-person experiences and effective blending of digital capabilities is needed to keep from missing out on potential revenue. Digital infrastructure has to extend into stores, alongside a full complement of payment options.

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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