Forecast 2030: Preparing For a Changing Economic Order

[Music] a very good morning to all of you uh we've just had very two interesting sessions which have really laid the groundwork I would say in the leadup to this discussion and I think we're going to pick up on some of those themes that were discussed mentioned by richer and uh between Mustafa and Jenny in the previous session um forecast 2030 which is not far away right 2030 is just six years away how is the economic World Order going to look like six years from now um just to throw in some some some of the data and figures and estimates that are out there the UN says that by 2030 the world population would cross 8.5 would be close to 8.7 which means 600 million more people out of that about a billion people will be over 65 years in age Goldman Sachs since I have Tod here has predicted that by 2030 300 million jobs could be lost or demoted due to AI climate change according to the World Bank could push 100 million more people into poverty and the World Bank also says that this could be the last decade where the average global growth rate would be about 2.2% uh one of the lowest in the past few decades I'm not trying to scare people here not trying to paint a very gloomy picture but trying to just show what are the predictions some of the trends that are going to play out by 2030 I've got a very distinguished panel here that's going to do some kind of Crystal gazing Deep dive into the major issues as to what's going to shape this world order Laura Todd and Jeremy let me just Begin by asking you very quickly two or three factors according to you and just just the headline points that are going to really play a key role in terms of really shaping the global economic world order by 20 30 which is as I said not very far away so Laura let me begin with you two or three key factors um thank you Samir I think the first point that that come to mind obviously is technology and Innovation which has really transformed our lives in the last few decades um and every time we thought the new technology comes in a new phase and yet there will be more new ones and I think of course the latest recently is the AI and the general and the Jet G gbt and what will come next we don't know and uh I'm not a technologist but I can say that we will anticipate more and more Innovation that will change our life change the way we operate change the way we invest um so I would put technology is one and the second one is sustainability whether it's green finance decarbonization and all of that very timely with cop 28 it is going to be a major theme coming going forward in terms of how the capitals are going to be allocated how people invest how it transform the um some of the basic livelihood how some of the more developing and emerging economy will have to benefit and participate in the decarbonization process and that again require capital and finally I would say um in the last few years people talk about deglobalization I find that um we will be into a phase of regl globalization or rather if it is not using the term reg globalization um I believe in the fragmented World whether it's regionalization or friend Shoring reshoring or however you want to call it connectivity will be the key uh and that connectivity in terms of the technology and The Innovation how the common human good can benefit from those Innovation and of course sustainability is the one theme that unite everyone so connectivity to me is a very key um theme for the next coming years three points Laura from you the AI technology uh sustainability and of course the de reglobalization was the term you used Jeremy coming to you quickly quick two or three points and then we'll Deep dive into some of those subjects according to you sure lading a little bit off of previous comments I think you know part of what I see is in the background um the internet itself which is a software mediated world is just more and more deeply penetrating everything and in fact the birth of large language models the birth of generative AI was only possible through the birth of all the data on the internet and so kind of organically the internet is becoming more pervasive and that softer mediated world is becoming more significant and that's accelerating at in an extraordinary Pace right now now in that context in the background gradually we're seeing built up an entirely new internet infrastructure layer on top of what has been historically a data and information and Communications internet layer we are seeing built up a globally available internet infrastructure layer for economic Contracting economic value exchange and you tokenization is is sort of a broader theme but fundamentally a new layer on the global on the in the global economic system for mediating economic and capital activity has been born it's been born over the past 10 years and I believe that is going to accelerate dramatically over the next seven years if we're talking to 2030 and that that will lead to dramatically higher velocity economic activity in the world significantly deeper integration among among different regions and and economies in the world and uh and so I'm quite excited about both of those kind of software mediated uh global scale internet phenomenon driving the economic uh Universe over the next seven years that's interesting I mean again technology is really at the heart in this whole new uh internet infrastructure as you're mentioning to coming to you I mean your thoughts I mean two or three key factors do you agree with some of the points or you have something it's going to be it's going to be a bit redundant but I'd actually take it almost in order to low I actually massively believe in the global connectivity and I think that'll be the absolute core I think much of what we're talking about issues around digitalization technology if I play on jer's a little bit if you go back in time you go back to early 1900s electricity was that transformation you go to the reference to the internet and and computing power in kind of the 80s 90s and the emergence of that clearly AI will play a role um clearly LA's reference to sustainability I want to always include um reference to inclusion because it's not just about sustainability and I think that goes to my Global globalization reference in a connectivity because all of that has to be done in a sense that we bring each other along in a global sense if you start the initial conversation about countries that are succeeding countries that are failing you know having spent the last 5 years in Asia you know as an American perhaps there's a lot of conflict but I I believe we need China to succeed um we do not want to see an unsuccessful China and so having everybody participate in a global sense in that growth and that that new economy in the markets I think is a crit the most critical element I want to pick up on reglobalization because that's something um Todd also spoke about so did you Laura how is that going to be possible given that what we've witnessed in the last decade or so whether it's the trade Wars the country is looking inward we've had brexit in Europe uh countries are prioritizing you know the domestic Industries subsidizing uh you know just to make sure that the domestic Industries growth this has led to a lot of tariff Wars we have seen that between China and the United States that could be a critical Factor wouldn't we in terms of shaping the world order so how do you see this reglobalization happening in this era well I I think that we've seen the Del globalization um has not been beneficial to a lot of people and I think um while you know it's already passay to talk about the benefit of globalization we are in a new phase where we really need to rethink I don't believe that countries or regions can uh exist in isolation and in a fragmented world you need more connectivities and I'm talking about you know in in terms of capital in terms of the benefit of innovation and technology and Health Sciences as we've seen in covid where it worked and where it did not work um um so you know reglobalization whether is a good word but certainly realignment uh where maybe the different parts of the world will remind in different way realign in different way and then you could have multiple um U players multiple parties in one sector and different parties so whether we can call it reglobalization definitely is a realignment I I believe and that the common good is what is driving all these uh possibility of realignment to is a realignment possible given what we have witnessed I think you have to also put in context if you think about sitting in this in this room would we've been doing this a decade ago or two decades ago two decades ago probably not a decade ago maybe and where we sit today and I think that dependency or opportunity Jenny's reference to Capital flows look at the fact that this region our economists predict will generate something like 1.3 trillion of if you will windfall from oil prices that money is recycled both domestically and globally and that that connectivity is critical and I think Capital will find its opportunities whether it's in AI whether it's in sustainability inclusion whatever it may be it will find that path and so I don't at some level I respect the comment that we can't talk about reglobalization per se but I think we need to contextualize that these things tend to EB and flow we've had a bit of a pullback but does a just we're not more globally connected today than we were 10 years ago I think would be a wrong premise and the question is the build from here and I continue to have a degree of optimism that those Capital flows will find those opportunities globally not just regionally talking about Capital flows uh Jeremy and that's something you touched upon now ai is really the buzzword it's it's some people are scared of it it could lead to lot of job losses need a new form of Workforce and that could also Al impact at least in the short term some of the economies because the demographics are very different if you move from one continent to another how much how big a factor is that going to be in terms of reshaping this order well I'm not an expert um but what what I can tell you from my vantage point as a software technologist is that um it seems like an enormous number of Industries and Fields are going to see dramatic productivity improvements uh through the application of generative Ai and and related Technologies uh and that goes all the way down to the shop floor and the impact of AI and Robotics and it goes all the way to the most advanced um knowledge work you know financial analysis for example which would you know some would put put up very high or the practice of psychology uh you know these highs scale or or even making medical judgments and recommendations you know across the board these high value uh roles in society uh are going to see dramatic productivity improvements um and so that's across the board and um you know I think the the discussion that's I think more and more important to have is that that will likely lead to Mass uh job dislocation everywhere uh and so when we think about the social instability that could emerge from the the scale of mass job displacement the potential for hyperconcentration of wealth in the companies that are you know essentially applying this technology um what do countries do to adjust to that economic picture the the role of universal basic income what does the shape of society look like in a world where an enormous amount of the roles that exist today as productive work will not be performed by humans I think that's absolutely within the realm in the next seven years and so the the the questions for me are are are questions of economic and social and political economic social and political questions uh that have to be answered and the overall organization of society uh in many different types of countries is going to have to shift and there's some very high risks that are embedded in that that could be explosive but there's also ways that we could see some really revolutionary social and political forms that emerge d i yeah can I build on that a little bit you made reference if I could Samir at the beginning Goldman Sachs research earlier this year talked about 300 million jobs displays I think you had peel that back a little bit and plays on Germany's comments that report indicates you know I'm not the expert but they indicate probably 2third of current jobs will be affected now they're using the US and Europe as a as a baseline for that and that extrapolates to almost 300 million jobs that will be displaced you know we as an industry tend to focus on the positives from an efficiency productivity is expected to improve probably about 7% of GDP we think that flows to about a 9% boost in the S&P so we look at it from a pure Financial but the underlying assumption embedded in that these people recycle I do think Jeremy's comment that's where I go back to the global not just globally geographically but also the greater connectivity between governments and businesses to sort through what happens to that displacement of jobs and that Baseline assumption that we have historically always created new jobs created new opportunities as as people have moved on that's a huge assumption and and how exactly we transition that that's not just a US issue the US has transitioned with the you know the IRA Act is a very different policy for the United States than what we would have seen at a point in time but that is an expectation of something like $3 trillion doll of investment in renewable energy in the United States these are different policies than we may have seen from the US over the last hundred years that have moving into more of an industrial if you will a more holistic view that I think amplifies Jeremy's point it's really critical that governments be aligned and it can't just be unilaterally what the US wants to do it needs to be global within a broader Community they talking about Transitions and you touched upon renewable energy and Laura I want to bring you in here the other big factor that's going to play which you spoke about earlier was sustainability and this whole uh transition towards uh renewable energy we're going to we are seeing massive Investments yes um the international energy energy says agency says sorry that peak oil demand would hit by about 2030 and after that it could start going down so we could see a massive shift and that could change the way uh some countries have been able to dominate how do you see that now well I think um the demand for Capital will be huge take China as an example it is the world's largest emitter and it has also made a very serious commitment um to be uh uh Net Zero by 2060 neutral by uh 2030 or 20 uh sorry neutral by 2050 so all of these decarbonization require Improvement in technology China already is the world's largest producer of wind turbine solar energy and so in renewal it is leading econ uh the electric vehicle and all of that but what is needed in the next phase of decarbonization is to make the renewable a lot cheaper more accessible to a larger uh population not only in China but globally and for that we require technology Improvement enhancement and that require capital and and we will see that that you know both China and the US are spending a lot of money uh increasing their R&D spending and so are other countries and a lot of the R&D spending are now focusing on the de uh the on the transition on the sustainable Finance sustainable economy per se so we can see that transition happening and I think that also lead the capital and that leads to spending and the focus I think you know in the US what thoughts that the IRA is one policy Direction in China and another country there are a lot of policy directions trying to G cater to that and that has to be the the climate change how we cope with um life in the decarbon in a gradually decarbonizing world is a common theme that require everyone's participation so I see that as a very important agenda item for all of us but Tod just to um you know add to that point I mean as Laura is saying that financing and capital is going to play a key role in this transition so it's a clear Advantage for advanced economies because a lot of countries emerging economies that would really under developed countries that would find it difficult to invest that kind of capital so it's it's really a case about a deep divide between the halves and Have Nots and that could that impact the the way the world shapes up the economic order shapes up in 2030 as a transition of course I think it's it's part of the comments that were made in Prior presentations that you know if you have a decoupling economically not just even politically right so I think we we often talk about the political decoupling but I think the economic decoupling is probably a greater risk um one of the Dynamics as an American I talk about you look at the the global geopolitical issues issues around the Middle East issues around Ukraine and Russia you know us China is less top of the list than it was at a point in time and the reality assessment as China it's more of a domestic economy issue demographics just the growth rates some parts of mixed stronger manufacturing softer Services it's probably more of an economic issue right now in China than it is elsewhere um and so I think you know than it is if I could between the US and China in that conflict I think your comment's legitimate I think the the comment I'd make nonetheless is the Emerging Markets have kind of led the way through the coming out of this crisis you know they were the first to hike rates to attack inflation they were the first to start to cut rates and you know I think we believe that the us is going to be slower to cutting rates probably not till the fourth quarter of next year many people expect much faster cut but we think it's going to take longer so in some ways the Emerging Markets are leading an economic shift right now if you look just bringing it back to this region for a second if I could comment because I think a lot should be said for the emphasis being P here on recycling of of that windfall into the growth of the market the desire that Abu Dhabi I think made the Declaration that that they want to double the amount of contribution from the industrial sector to GDP currently in the single digits to move that into double digit as a percent of the economy that's a massive investment in an Emerging Market to make itself more relevant both domestically but that will add to its relevance globally as well so hopefully hopefully hopefully there will be an Emerging Market leadership as not just all countries Falling Away we've got only 5 minutes left so JY I'll come to you to sum up this conversation I know that we can discuss a lot more issues uh that would impact the world order if you had to look at the next six seven years who do you think which countries are going to emerge as the winners and which could suffer in the process if they don't factor in some of the changes rapid changes that are coming in what are those I mean I'm not asking for specific countries but countries that are able to adapt to these changes which what are those factors you think are very critical and which could emerge as the winners well there's a lot of factors obviously um and an earlier speaker had their 10 10 factors for successful Nations Etc which I thought was pretty interesting um maybe I'll be a little bit more narrowly focused which is um and and this is kind of coming from my vantage point as a a technologist and and a little bit more focused on what's happening in the technology space I continue to believe that uh you know software powered Innovation um open networks the application of open software networks um the embracing and building of systems that apply generative AI uh embracing New Economic infrastructure that's built up uh on the internet uh which in turn you know comes back to questions of um how do countries allow Capital to flow how free are those Capital flows uh how Progressive are those countries with respect to uh enabling uh higher velocity forms of capital formation to take place uh using some of these new infrastructures um those are kind of infrastructure layer technology-driven infrastructure layer choices that that have to be made um my own view is that um you know similar to say post 2001 uh with the opening up of the internet and the opening up of e-commerce and the opening up of digital media and Communications we the world has a choice to make now about the opening up of economic activity on the internet and uh we could see Capital markets that look more like Amazon's Marketplace or the Alibaba Marketplace than say the New York Stock Exchange and kind of radically longtail capital markets that uh allow for Capital allocation to happen with extraordinary velocity and specificity is a huge opportunity and so I think the countries that are out in front embracing that kind of uh Technical and economic change have a stronger chance at at at you know forming capital and and supporting the kind of Investments that are needed in uh in the coming years you know five to seven years Laura what about you your final thoughts on this um I think uh coming where I'm I'm coming from I think Capital Market the role of Capital Market to address your point of what about the Emerging Market it is exactly as I said you know in the technology and in the commonization sustainability Innovation it require Capital so that the benefit of that can be spread to the developing uh uh population and I think uh there's no better example than when we look at renewable renewable energy has to be massively available to the uh general population in the developing Market I think that will be a very major theme coming up to I'll give you the final word you you heard what the other two panelists had to say anything you have to add or you think these two factors technological Capital flows and the sustainability well I'm just a huge believer in the same way Germany say he's focused on technology I see technology is a tool to ultimately what I am focused on which is capital flows and so there's no question that digitalization or whether it's blockchain or otherwise will emerge as a core element of the infrastructure financial services and the broader ecosystem I have no I have no question about that over time it's a question of what's that time frame exactly how does that evolve it will evolve I am much more focused on Capital flows and being in the middle of those Capital flows and I think we sit in a region that has a a a tant amount critical element and contribution and participation in that both for its own domestic good but also for the regional good and for the global good and so if we can all play a role in that hopefully we can together create you know a bit of a of a more positive forward I I think it's worthy of referencing the stability of the system in spite of all the shocks that we' se in the world should give us a degree of confidence that we have a we have a constructive forward well that's all we have time for I'm sure we could have gone on and discussed many more topics and themes but thank you so much for sharing your insights with us that was a really interesting session and we look forward to the next six year