The world market is witnessing several changes and challenges, such as technological disruptions, geopolitical tensions, political dominance in the global economic terrain, etc. However, the secret to staying ahead lies in the ability to persevere amid those ups and downs. One way of overcoming the challenges is by being aware of the emerging trends. Going a step further, adapting to these trends is key to thriving in the complex and ever-challenging global trade environment.
While both short-term and long-term trends dominate the market, understanding the long-term trends and making the most of the opportunities they offer is very important to succeed. A recent report by the World Economic Forum (WEF) provided more details about these long-term trends shaping the global economy by getting insights from top economists working in reputable private and public organisations.
So, what are those major long-term economic trends shaping the world economy?
(a) International Trade is changing
The global economy is rooted in international trading. However, international trade is changing in several ways, driven by other factors such as geopolitical tensions, vested interests, and government policies aimed at putting one’s country at an advantage. All these are taking their toll on the global economy, as some of these biased policies, such as tariff regimes as being used by US President Donald Trump, protectionist policies, and others, divide the world market instead of uniting the various countries who were hitherto trade partners working for their mutual benefits based on their comparative advantages. Understanding the evolving nature of international trade and the emerging realities will help any country or entity to adapt and survive.
(b) Effect of changing demographics on the workforce
While some regions, such as European countries, are witnessing an increasing ageing population, others, such as Africa and Asia, are experiencing a rise in the active labour force. Many organisations have reported that their operations are affected due to their inability to attract an adequate number of active workers. Another interesting aspect of this trend is the role of skilled workers’ migration (this happens when young talents move from places where they are poorly paid to places where they believe they will have greater opportunities). However, the success rate of such migrations is uncertain due to some processes that make it hard. With a 63% skills gap in the labour market, overcoming the problem of getting an active workforce in some regions is a major issue dominating the world economy.
(c) AI is changing productivity
Technological advancement, especially in Artificial Intelligence (AI), is redefining productivity. According to an earlier report by WEF, AI is projected to add $4.4 trillion to the global economy annually by 2040. This means that AI innovations and trends are too important to be ignored. AI mastery and its application to work can make a big difference in output. Notably, some individuals who were not considered to be very skilled before are getting more equipped with AI and delivering better results than those hitherto called ‘experts’. So, it is no longer just about an individual’s qualifications and experience, but rather, how proficient a worker is in utilizing AI can significantly boost the result of that person.