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Aden - Yasmine El Tohamy - Recent developments globally make us wonder how year would shape up for an increasingly intertwined global economy
How would the world will look like in 2020? I really wonder what I can say on a topic where everyone has a strong view, and yet on something that no one really has a clue. It is a bit like gazing into a crystal ball; but then again, predicting the future and trying to know what lies ahead has always intrigued us as humans.
So, do bear with me as I gaze into my crystal ball, and try to share with you how I think the world will look in 2020. Here are some trends that are inevitable to my mind.
Crises are here to stay
Crises will continue and become a part of our lives, and we will learn to better deal with it, accept it and succeed despite it. In fact, in my view, the recent crises and the issues the world faced were because us, regulators, politicians and companies all assumed that crises could be managed.
That is not true and never will be. A crisis is like a tsunami, termites, or small forest fires: If you try and eliminate them or control them, they just migrate, change form and return with a mutated form, leading to bigger destruction.
So, in my view, by 2020 and beyond, this realisation will change and crises can be eliminated and managed, and the approach will shift to how to survive and thrive, despite crises.
Emerging markets will become more relevant; developed markets to slow down
For a long time, emerging markets had been seen as a sleeping giant, with the potential to grow but lacking the ability to realise that potential. Things changed, sentiment changed and everyone started talking about EM as the emerging super-force. The rules of the past will cease to apply. Developed markets will remain big and slow on growth, and EMs will be smaller/fragmented and volatile, but definitely at high growth.
We are in a world where a new order is emerging, where emerging markets are suddenly transforming their role from that of a producer to now also being a consumer. A new mass of two billion new consumers is being created, a new $30 trillion opportunity is opening up in size, with a large majority with unmet needs, high aspirations, huge consuming capacity, rising incomes, increased access through improved communications, telecom, the Internet and the media, and the availability of products in abundance.
Growing inequality will be the new crises
The rapid structural and technological changes that will take place as wealth and markets shift from the West to the East, and from DMs to EMs, will be at a pace and speed that will be traumatic, and many markets will not be able to handle them well. We will see a mad scramble for wealth, and power through money, in these markets the will increase the divide between the haves and the have-nots.
This will lead to a worldwide crisis on equality, and this growing inequality will in turn lead to economic slowdown. As the divide between the rich and the poor, the old and the young, men and women, EMs and DMs, continue to grow, the legitimacy of most systems will be called to question - almost earthquake-like, and new systems will emerge, and the old will die.
Governance will be redefined
Recent crises have left the world more vulnerable, more exposed and its citizens are more aware. In the past, most crises were localised and some part of the world always offered hope for growth. This time is different as the impact is global.
Nature defines, what Abraham Maslow explains so aptly in his theory of hierarchy of needs. Hygiene factors or the basics de-motivate in their absence, and motivators become irrelevant if hygiene/basic needs are not fulfilled. So, by 2020, we will hopefully recognise this better and be closer to basics.
Faster move from a manufacturing- to services-based economy - the 'new normal'
Every model of growth that the world has seen in the last 150-200 years have a finite life and we have to be aware of the same and recreate our opportunities. Our current problems in the early part of the 21st century now are from the need to move from a manufacturing to a services-based economy, as excessive automation has killed skills and the need for skilled jobs.
By 2020 and beyond the emergence of firms and skills that are better at providing funds for new enterprises, and new technologies and ideas for SMEs that will drive new growth through deployment of people and skills.
Women will be more empowered
By 2020 and beyond, I expect to see a stronger emergence of women, often quoted to be the "third billion in the EM opportunity". They will play a larger role, outside their homes, in addition to their traditional roles of homemakers and care-givers.
I expect women to hold positions of power, in governments, in companies, in chief executive and board roles, in driving new business opportunities. Their numbers have swelled, they are more educated today, they are more sensitive to real issues as they have gained this from their roles as homemakers, they drive consumption, and they often control the home economy increasingly.
'Soft power' versus 'harder path'
We will see the greater emergence of the use of "soft power" versus the "harder path of control and command" in the world, among nations and in companies. The global focus on sustainability will grow, and we will see greater emergence of social entrepreneurship and social impact investing/growth. Themes like poverty, education, health, environment, gender equality, inclusive growth, age inequality and otherswill become paramount.
Policies, capital and technologies will chase these themes, so we must recreate and re-tool our capabilities and skills to realise these new opportunities. The law of nature also defines that to swim fast, one must move in the flow of the tide. The tide is in this direction, and the winners will be those who move faster towards it.
The writer is founder of Dunia Finance and co-founder of Fullerton Financial Holdings. Views expressed are his own and do not reflect the newspaper's policy.
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