Megatrends

Overview

One Minute Read

Global megatrends are prompting structural shifts in many industries and changing the drivers of corporate earnings. Most major economies are undergoing powerful shifts in their Demographic profiles, whilst the rapid Globalisation of the early 21st century is evolving or even reversing. Climate change and resource scarcity are coming driving a major focus on Sustainability, perhaps the greatest global challenge. Meanwhile, the increasing ubiquity of Technology is redefining business models in a host of industries and unleashing widespread disruption. These megatrends translate into specific drivers for each sector and industry.

Demographics

Diverging populations & social change

The make-up of the global population is changing fast; in 2011 there was a global population of 7 billion, but by Novermber 2022 it had reached 8 billion people. The latest UN projections suggest that the world’s population could grow to around 9.7 billion in 2050 [1]. Hidden within the increasing population size are diverging demographics; on average we are getting older, we are getting richer, more and more of us are living in cities and our patterns of work are changing. These societal changes create opportunities, challenges and risks that are transforming many industries.

Increasing multipolar world

The world is getting more connected and economic power is shifting east. The emergence of a more diverse mixture of major economic powers may complicate trade, security and efforts to coordinate global governance. Indeed geopolitical uncertainties and tensions are already increasing in multi-lateral trade and political approaches (e.g. US-China). The Russian invasion of Ukraine has underlined the risks of globalisation and the shockwaves are increasing transformation of industries.

Climate change & resource scarcity

The world is getting hotter; impacting climate, weather, sea levels, resources (e.g. water) and human health. In October 2022, the United Nations Environment Programme announced that there is “no credible pathway to 1.5 degrees C" by 2050, as agreed by the Paris Climate Accord. More likely atmospheric warming will likely be 2-3 degrees C by 2100 [1]. There is also a growing need to conserve all world resources. Serious action needs to be taken before 2030 and the sustainable transformation will profoundly impact societies, governments, industries and businesses.

Increasingly rapid innovation

The pace of technological change, particularly in information, communication, and bio-technologies, is unprecedented. Cycles of technology-induced societal and economic change have accelerated in past decades, and are likely to accelerate further (especially after COVID-19). Digtisation is disrupting consumer behaviour and transforming industries in a Fourth Industrial Revolution. Developing Green technologies form the basis of the sustainable transition. Whereas, advances in Biological sciences, combined with the accelerating development of computing and artificial intelligence (AI), are fueling a new wave of lifesciences innovation that could have significant impact in sectors across the economy.