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Gamechangers: tomorrow’s world?

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Over the past four years, the global economy has faced a “snow globe” moment – where everything was shaken and we’re starting to get a clearer sense of how it is settling and what that will mean going forward.

Some changes over the past four years are abundantly clear – from the dramatic rise in inflation which lifted interest rates to multi-decade highs, to numerous geopolitical shifts and the seemingly irreversible shifts in working patterns, such as remote work, the most visible. But behind these trends, the underlying fabric of the economy has changed enormously:

  • Pre-existing technological trends are still accelerating (such as rapid digitalisation of the economy), and transformative new ones (such as the metaverse or AI) have emerged and may or may not have come to pass without the pandemic shock.
  • Other systemic changes to the economy have been evident over the past few years, with birth rates moving sharply lower, working habits changing and a clearer focus on the greening of the global economy pushing governments and private actors down the path of the energy transition.
  • Consumer patterns have evolved, too, with spending on athleisure, personalisation and travel all seeing substantial changes on the back of the pandemic.
  • On the other hand, some trends have gone into reverse – with de-globalisation clearly the biggest risk in a world where geopolitical tensions are much higher.

On many metrics, the world is very different today than it was in 2019, which was already dramatically different than before the financial crisis. And yet, markets and economic analysis are routinely based off historical comparisons to the 1970s, 1990s, or 2000s even though the world we live in is different in so many ways. Whilst, as the saying by philosopher George Santayana goes, “those who do not remember the past are condemned to repeat it”, it’s likely that putting too much weight on historical comparisons could also lead to mistakes.

80%
Developed Markets’ share of global GDP in the 1970s
61%
Developed Markets’ share of global GDP in the 2020s

The underlying fabric of the global economy is changing so much and so quickly that we need to think about these changes even more in the years to come. In the coming pages we explore how the world has evolved and what this means for the economic landscape going forward. We look at the key changes in our nine key themes that we think will shape the future – examining what has accelerated, stalled, or changed path, to outline how the global economy looks so different today than at any point in the past.

This isn’t to say that the global macro environment is getting materially better or worse, but that it is changing at an unprecedented pace. Some of these changes could well be very good news – such as rapid technological innovation or an accelerated energy transition. But, at the same time, growing trade tensions and falling birth rates could weigh on global growth. Other changes are more subtle, such as changing consumer habits or ways of working.

5.5%
Share of world’s population aged 65+ in the 1970s
10.5%
Share of world’s population aged 65+ in the 2020s

Looking ahead, we could well be moving to a world that is more volatile in both directions. Technological breakthroughs may drive periods of rapid investment growth (as we’re seeing with artificial intelligence) but more frequent supply shocks could cause periods of higher inflation to become more commonplace. Tracking these developments in real time will become increasingly difficult for economists and policymakers, too. One thing is for certain, though: The world will never be the same again.

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Gamechangers: Tomorrow’s world infographic

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