Trends That Could Affect The Global Economy

Written by: William Garriell
01/08/2020

smart-devices

The past decade has been an eventful one for the global economy. Much of this has been shaped by the fallout of the last global financial crisis, but also the subsequent recovery efforts, which were often shaky.

However, the majority of economies around the world are now on somewhat steadier footing. While this would typically be a return to normalcy, it might not be the case. Instead, many reports suggest that the global economy looks set to enter a ‘peak decade,’ with there being a variety of trends looking to disrupt it.

This has led to a variety of reports speculating on what trends could shape the global economy over the next ten years. While there is a variety of them that may have an impact, there are a few specific ones that may play quite a significant role in the years to come.

Likelihood Of A Recession

This is perhaps the largest trend that may have many investors and entrepreneurs concerned. While the global economy has continued to expand over the past decade, this has shown signs of slowing down. This has led many to fear that it will continue doing so until entering into a recession.

Much of this is because of the belief that the economy is in the late stages of a cycle. Coupled with this has been a bond market bubble, which has helped push interest rates to all-time lows. This could be set to unwind.

Should this happen, then fiscal policy will be expected to make up the bulk of any stimulus packages, as monetary policy has already reached its limit. Though there will be a few winners if this occurs, there will also be losers, with credit, deflation, and growth being the big three.

Climate Change

One significant change that looks to make its presence increasingly felt in the coming decade is climate change. The main driver behind this is that major banks expect the world’s population to grow by over one billion people in the next ten years. This increase could subsequently put a strain on the world’s finite resources.

Coupled with this is the belief that it could exhaust the remaining carbon budget, which could have a variety of other consequences. Prominent among these are speeding up the pace of global warming and pushing temperatures beyond an irrecoverable tipping point.

Should this happen, then there could be a variety of economic, political, and social consequences. Some reports speculate that the resulting fallout of climate change could push over 100 million people below the poverty line in the next decade. This could worsen over the following decades.

Robots & Automation

Automation and robots have been having an increasingly large impact on the global economy in recent years. This looks as though it will continue to be true for the next decade, and possibly for years more to come. There are a variety of ways that this could be the case.

For example, it’s estimated that only 59% of tasks will be done by humans by 2022, with this being seen across 12 industries. However, it’s expected that this will drop to just 50% by 2035; the remaining half will be completely automated.

Alongside this, some reports suggest that artificial intelligence (AI) may reach a level of intelligence that’s comparable to humans by the end of the decade. This could be a good sign and a bad sign, depending on the industry.

For example, reports indicate that big data, AI, and local production will all be winners in this. However, global supply chains may suffer because of it.

Moral Capitalism

One trend that’s become increasingly larger recently has been that of moral capitalism, which is slightly different from how the process typically works. Traditionally, capitalism is focused on maximizing shareholder value, with all activities being done toward that goal. However, this is going out of fashion quite quickly.

Instead, firms have been paying an increasing amount of attention to other key stakeholders in the business. This includes local communities, employees, the environment, and much more. As such, shareholder gains have become less prominent for many firms.

This has led to more organizations focusing on decreasing inequality and moving more toward redistribution and fairer wages. Coupled with this has been calls for a universal basic income, and a variety of other, more philanthropic aims.

Smart Devices

Smart devices have already been quite a significant trend across the globe. However, this seeks to continue having quite a substantial role around the world. This is speculated because an estimated three billion people are set to gain access to smart devices over the coming decade.

This comes amidst an estimated 500 billion smart devices being in use by 2030. As a result of this, there could be a variety of changes in how many firms do business. Alongside this, it will necessitate upgrades in infrastructure, and much more.

Despite being in the midst of its rollout, many experts speculate that 5G may not be able to handle the connections that would be needed with these devices. Coupled with the rise of these smart devices will also be a similar rise in cybercrime. According to reports, this is estimated to be worth as much as 7% of global GDP by 2021.

Other Misc. Global Economic Trends

Alongside each of the above, there are a few other global economic trends that may play quite a significant role in the years ahead. While these might not be as large as some of the above, they should be no less critical.

The primary reason for this is that they could have quite a substantial role when combined. The most notable of these are:

  • Space;
  • Peak Globalization;
  • Demographics;
  • Quantitative Failure, and;
  • Splinternet.

This should mean that there’s quite an extensive number of challenges for investors and entrepreneurs to overcome. However, there could also be a few notable benefits alongside this. This is because these trends could also provide a set of unique opportunities.

While these may take some time to identify and act upon, they could prove to be worth the risk, especially considering the ever-changing landscape.


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