China's continuing ascent

China may no longer be growing at 10 percent per year, but it still appears capable of generating fairly remarkable economic growth and of taking an ever-more-central role in the world over the coming decades. As the world's second-largest economy, its trajectory remains one of the most consequential variables in any long-horizon forecast.

The rise of the global middle class

As China becomes wealthier and other emerging-market economies follow, the global middle class should continue to expand—with the usual implications of greater consumption, stronger demand for discretionary goods and services, and rising aspirations for healthcare and education.

Technology and AI at the centre

The technology sector looks capable of remaining at the heart of economic growth and innovation. AI applications could broaden productivity gains to a much larger fraction of the economy than has historically been the case, potentially representing the main economic theme for years—if not decades— to come.

Intensifying demographic pressures

Demographic challenges are set to deepen, with fertility rates continuing to fall and longevity continuing to rise across virtually all G20 nations. Our modelling suggests the global population peaks in 2066—outside the next quarter century, but not by a wide margin—making demographic policy one of the defining challenges of this era.

A multipolar world order

The relatively recent pivot from a hegemonic world with the U.S. as the sole superpower to a multipolar world—in which multiple countries play leadership roles—looks likely to be enduring. Strong countries are less likely to heed international norms and more likely to push smaller countries around. Geopolitical stability declines; military spending is certain to rise.

Deglobalisation

The recent pivot toward deglobalisation may persist, if hopefully at a somewhat less frenetic pace than the last several years, as cliques of countries form and nationalisation trumps multilateralism. The ratio of global merchandise exports to GDP growth has already trended decisively lower since the late 1990s.

Greater bond market vigilance

Bond markets may remain in their new state of greater alertness after more than a decade of drowsy indifference. Fiscal excesses may attract greater scrutiny, leading to a relatively steep yield curve and bond yields that are not as low as during the 2010s.

Climate change, increasingly visible

Climate change is not a new theme, but its effects are starting to become more visible, more problematic, and less easily reversed. Among many possible consequences, migration pressures could mount from the hottest parts of the world. The political will to combat this force appears to be fading as other economic and political imperatives dominate.

Diminished U.S. exceptionalism

U.S. exceptionalism is likely to diminish somewhat. While the U.S. economy will probably continue to grow faster than most developed-world peers, the growth advantage may not be as great as in recent years. Immigration is down, and questionable long-term policy decisions could undermine some fraction of the country's growth trajectory. Conversely, other countries— startled by recent events—are reprioritising economic growth. The clout of the U.S. dollar and the Treasury market is likely to decline somewhat over time.

Faster productivity growth

We budget for faster global productivity growth in the decades ahead, given a confluence of potentially revolutionary technologies: AI applications in natural language processing, robotics and sensing, healthcare innovations, and beyond. It remains to be seen whether demand for human labour will decline at the economy-wide level—but if so, the consequences would be far-reaching, including structurally higher unemployment, more generous government income supports, and likely a higher effective tax rate on capital.

Peaking oil demand

Oil demand is expected to peak somewhere between 2029 and 2034. That does not mean exploration will grind to a halt—the decline rate on existing wells is such that new drilling will have to continue for the foreseeable future. Nor does it guarantee that oil prices will fall, as that depends on the sensitive interplay of supply decisions against projected demand. But it marks a significant structural change of substantial relevance to several industries.

India and Southeast Asia's ascent

India and several Southeast Asian nations—including Indonesia—appear to be on the cusp of making genuine waves in the global economy over the coming decades, given their large and youthful populations and rapid growth rates. Africa should also start to become more relevant, though its biggest impact may be saved for the latter half of the century.