Trade uncertainty, shifting economic power,
and social upheaval are some of the key issues likely to reach boiling point
over the next decade. According to one of the world's largest banks,
significant shifts in the global economic landscape could reverse many of the
defining trends of the past four decades. Population growth, environmental
catalysts, and changing attitudes to globalisation are igniting the change,
with adaptation key as we head into the 2020s.
According to analysts from Bank of America
Merrill Lynch (BAML), a range of economic and social challenges are
"heading to a boiling point... We enter the next decade with interest
rates at 5,000-year lows, the largest asset bubble in history, a planet that is
heating up, and a deflationary profile of debt, disruption and demographics...
We will end it with nearly 1 billion people added to the world, a rapidly
ageing population, up to 800 million people facing the threat of job automation
and the environment on the brink of catastrophic change."
The relationship between globalisation and
trade continues to affect economics and culture, with "peak
globalisation" possibly behind us as governments seek to reassert
sovereignty over trade and investment flows. From the trade war between the
United States and China to Brexit to the rise of nationalist politics, the new
landscape is likely to see increased control amidst a constrained flow of
capital, goods, and people. According to BAML, global trade growth has fallen
below world economic growth for only the second time since the GFC, and only
the sixth time since 1980.
"Countries will develop explicit
national industrial policies and boost spending on R&D [research and
development] to foster local innovation, protect nascent industries, and shield
national champions from hostile foreign takeovers," the report predicts,
adding "Advanced industrial automation can enable local production,
unintentionally playing into rising nationalism and trade protectionism themes
but also helping to reduce environmental footprint."
The ongoing trade war between the US and
China has already led to increased self-reliance in both nations, which could
have profound effects over the course of the 2020s. Along with lofty political
ideals, the last few decades of globalisation have been largely driven by
access to cheap labour forces in developing countries. According to BAML,
increased localism will have a profound effect on what we can buy and how much
we will pay: "The 2020s will likely mean higher [economic] growth, higher inflation,
higher interest rates, and outperformance by global equities and commodities
As the 2020s roll on, economic realities
will be increasingly affected by population growth and the coming climate
emergency. According to the Bank of America, the coming decade will see
"peak youth" for the first time in human history, with more seniors
aged over 65 on the planet than children aged under five. "Peak oil"
and "peak conspicuous consumption" are also coming, with climate
action bringing another huge transformation to the global economic landscape.
According to BAML, "Bold climate action could yield a direct economic gain
of $US26 trillion through to 2030 compared with business as usual."