As analysts, part of our job is to try to decipher the broader trends impacting businesses. Needless to say, the exercise is becoming more and more difficult, and anything beyond 24 to 60 months looks very futuristic. That’s why I enjoy reading prospective books and especially publications from the National Intelligence Council. Published every four years since 1997, Global Trends assesses the key trends and uncertainties that will shape the strategic environment for the United States during the next two decades. I strongly recommend you read the latest version published: Global Trends: A More Contested World.
This report confirms some of the early trends we identified at the beginning of the year in the report, Geopolitical Disruption Demands Local Trust.
- 2 billion people by 2040 (+1.4 billion), and India to overtake China as the world’s most populous country around 2027.
- Median age to increase from 31 to 35 years between 2020 and 2040. In many older countries, including a number of advanced economies (Japan, South Korea, Europe … ), the cohort over 65 is likely to approach 25% of the total population by 2040 (versus 15% in 2010). These countries are likely to see further productivity slowdown in the coming decades, because older workers usually show fewer productivity gains, and a greater share of national income will be diverted to pensions and healthcare for seniors. The key variable here is how China will deal with its own demographic crisis: Its population of over 65 years old will double to reach 350 million people!
- Urban population to rise from 56% to 67% between 2020 and 2040. Sub-Saharan Africa and South Asia will contribute nearly 50% and 33%, respectively, of the increase in poor country urbanization, with a huge population for cities such as New Delhi (43 million), Dhaka (31M), Cairo (28M), Mumbai and Kinshasa (27M), Mexico City (25M), Lagos and São Paulo (24M), and Karachi (23M).
- Physical effects of climate change are likely to intensify during the next two decades, especially in the 2030s. The impact will disproportionately fall on the developing world and poorer regions.
- Key technologies to watch: green hydrogen, small modular nuclear reactors (SMRs), advanced energy storage, and solar photovoltaic and wind-powered plants.
- As the world gets closer to exceeding 1.5°C — probably within the next 20 years — calls will increase for geoengineering research (solar radiation management [SRM] and stratospheric aerosol injection [SAI]) and possible deployment to cool the planet, despite possibly dire consequences.
- Debate will increase over how and how fast the world should reach net zero as countries face hard choices over how to implement drastic emissions cuts and adaptive measures. Neither the burdens nor the benefits will be evenly distributed within or between countries, heightening competition, contributing to instability, straining military readiness, and encouraging political discord.
- Rising national debt, a more complex and fragmented trading environment, a shift in trade, and new employment disruptions are likely to shape conditions within and between states.
- Disruptions in employment will continue, with automation and productivity as key factors. The number of jobs created by new technologies is likely to surpass those destroyed during the next 20 years, judging from past episodes. One study by the World Economic Forum estimates that by 2025, automation will have created 97 million new jobs and displaced 85 million existing jobs.
- Multinational “superstar” firms perpetuate economic globalization. Large platform corporations — which provide online markets for large numbers of buyers and seller — could drive continued trade globalization and help smaller firms grow and gain access to international markets. These powerful firms are likely to try to exert influence in political and social arenas, efforts that may lead governments to impose new restrictions.
- Economic activity forecast to tilt in Asia. According to Oxford Economics, China, India, and Indonesia will rank as the number one, number three, and number eight economies worldwide, respectively, based on GDP. Increased growth rate in Asia could help countries avoid the middle-income trap.
- Tech will offer the potential to mitigate problems, such as climate change and disease, and to create new challenges, such as job displacement. Technologies are being invented, used, spread, and then discarded at ever-increasing speeds around the world, and new centers of innovation are emerging.
- During the next two decades, the pace and reach of technological developments (AI, additive technologies, biotechnology, space exploration) are likely to increase ever faster, transforming a range of human experiences and capabilities while also creating new tensions and disruptions within and between societies, industries, and states.
- State and nonstate rivals will vie for leadership and dominance in science and technology, with potentially cascading risks and implications for economic, military, and societal security.
The report goes on to analyse emerging dynamics, within societies, at the state level, and in the international system. These structural forces, along with other factors, will intersect and interact at the levels of societies, states, and the international system, creating opportunities as well as challenges for communities, institutions, corporations, and governments. These interactions are also likely to produce greater contestation at all levels than has been seen since the end of the Cold War, reflecting differing ideologies as well as contrasting views on the most effective way to organize society and tackle emerging challenges.
Finally, the third section of the report identifies several key uncertainties and uses these to create five future scenarios for the world in 2040:
- Renaissance of democracies
- A world adrift
- Competitive coexistence
- Separate silos
- Tragedy and mobilization
The fifth scenario is the most interesting one, since it’s the most disruptive. Here, a global coalition, led by the EU and China working with nongovernmental organizations and revitalized multilateral institutions, is implementing far-reaching changes designed to address climate change, resource depletion, and poverty following a global food catastrophe caused by climate events and environmental degradation.
These scenarios are not intended to be predictions but to widen the aperture as to the possibilities, exploring various combinations of how the structural forces, emerging dynamics, and key uncertainties could play out.
Definitely some good food for thought. Check out our take on what this could mean in the short term for CMOs in our recent report, Geopolitical Disruption Demands Local Trust.