The global economy is undergoing significant transitions that will shape the future of industries and markets. What do they look like today, how do we expect them to unfold over the next ten years, and what are their implications for businesses, investors, and policymakers?
From the rise of artificial intelligence and automation to the maturing conversations around sustainability and renewable energy, transitions are already underway that will reshape the way we live, work, and do business. At the same time, the investment landscape continues to evolve, with new opportunities and risks emerging across asset classes. As investors seek to navigate this changing environment, understanding the key trends and transitions that are shaping the future will be crucial for making informed decisions and capturing value. And that’s what Next Decade Investing is all about: we’ve brought together experts from across Natixis Investment Managers and asked them how they are assessing the key trends today, to provide you with the insights that can help you tomorrow.
Register to read 'Next decade investing'
Included in the white paper:
- How demographics impact investor behaviour
- The long-term outlook for emerging markets
- The impact of macroeconomic volatility on financial markets
- Equity and fixed income themes for the next decade
- Asset allocation and the evolution of the 60/40 portfolio
- Private assets in a climate-friendly economy
We really focus on the long-term secular drivers and sources of sustainable and profitable growth. Such as the evolution of payments from paper to electronic; the migration of retail from bricks and mortar to online; and the transformation of our world through the development and integration of AI."
– Aziz Hamzaogullari, Founder, Chief Investment Officer and Portfolio Manager of the Loomis Sayles Growth Equity Strategy Team
There are long-term investing thematics which have not received as much attention as AI, and so are trading at lower valuations, but could hold just as much investment potential in coming decades. Three which we think investors should pay close attention to are: global supply chains, healthcare, and water sanitation."
– Jens Peers, CIO, Mirova US
There’s a role for every source of energy on the planet and there are real economic consequences to the policy choices we make. We must think about projections and the returns on the capital deployed to see how we can value each project and whether they justify receiving capital for the levels of expected returns."
– Chris Wallis, CEO, CIO and Portfolio Manager, Vaughan Nelson Investment Management
A world in transition
From the race to dominate AI to the impact of shifting demographics on growth to diverging national interests around climate and energy policies, find out how accelerating disruptions and distinct transitions are becoming the defining features of our times.
- By 2035, technological advances like automation, machine learning, and artificial intelligence will likely have a major disruptive impact on job markets, making millions of jobs obsolete1. Technologies like self-driving cars are expected to proliferate, raising governance and adaptation challenges1. Quantum computing could revolutionise fields like materials science and drug discovery3. Artificial General Intelligence (AGI) and potentially Artificial Superintelligence (ASI) may emerge, necessitating robust ethical frameworks3.
- The consequences of climate change are likely to become increasingly apparent by 2035, leading to more climate-related political disputes1. Renewable energy could proliferate but trigger instability in fossil fuel-dependent countries1. Climate technology integrating AI climate models, renewable tech, and geoengineering are expected to become crucial global infrastructure3.
- While the US should remain the largest military power, China's influence is expected to grow substantially1. Russia may focus on asymmetric advantages to counter its declining population1. New arenas of state competition could emerge around space, cyberwarfare, internet governance, and the Arctic1. Meanwhile, global trade is unlikely to sustain the high growth rates reached in recent decades as China reorients toward domestic consumption1. Regional trade agreements excluding major powers like the US and EU should expand1 and a push for higher environmental and labour standards in developing countries is expected1.
- Ageing populations, predominantly in developed countries, are likely to strain resources and prompt political tensions around migration1. The transition to an information economy could shift partisan coalitions and incentive structures in politics1. Hyper-personalization through AI will likely transform education and marketing3. Brain-computer interfaces are expected to blur human-machine boundaries3,2.
- An ageing population will likely lead to a decrease in labour-force participation and productivity. As more people retire, the working-age population shrinks, potentially leading to labour shortages and increased pressure on remaining workers4,6. However, if older workers remain healthy, they can continue contributing economically, mitigating some negative effects6.
- Ageing populations will increase dependency ratios, leading to higher public spending on pensions, healthcare, and social services. This will put significant pressure on public finances, especially in countries with generous state support for the elderly5,7.
- The shift in demographics is expected to lower real GDP growth rates. The extent of this impact will vary by country, with advanced economies facing more immediate challenges due to their already high age-related spending5,7.
- The demographic shift will be most pronounced in East and Southeast Asian economies like South Korea and Singapore, where the old-age dependency ratio is expected to increase significantly. In contrast, regions like sub-Saharan Africa, with higher birth rates, will experience these demographic changes more gradually7.
- As the consequences of climate change become more severe, competition over dwindling natural resources like water, arable land, and energy sources will intensify geopolitical tensions and conflicts, especially in vulnerable regions,8,11. This could destabilize already fragile areas and trigger mass migration and humanitarian crises.
- Countries' ability to mitigate and adapt to climate change will reshape global power dynamics. While advanced economies aim to decarbonize by 2035, many developing nations risk being left behind, lacking resources for an energy transition9. This could increase the influence of countries like China who can offer partnerships on green technology and financing8,12.
- Diverging national interests and mistrust between major powers like the U.S. and China over climate policies could further strain international cooperation and undermine the rules-based global order12. Fragmentation may impede collective action, as the world has already fallen behind emissions reduction targets10.
- Climate change will create new arenas of strategic competition between states, such as the Arctic, space, cyber governance, and climate engineering technologies8,11. This could exacerbate great power rivalries and militarization of regions.
- Domestic political pressures from Ageing populations, economic disruptions, and climate impacts could constrain countries' climate policies and ambitions8,11. This could fuel nationalism, populism, and a prioritization of narrow self-interests over global cooperation12.
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1 1 Global Trends to 2035 - European Parliament https://www.europarl.europa.eu/RegData/etudes/STUD/2017/603263/EPRS_STU%282017%29603263_EN.pdf
2 Unveiling the Future: 10 Predictions for a Transformative 2035 https://datafloq.com/read/unveiling-future-10-predictions-transformative-2035/
3 2035 Vision: Ten Predictions for the Future - The Digital Speaker https://www.thedigitalspeaker.com/2035-vision-ten-predictions-future/
4 Implications of Population Ageing for Economic Growth https://www.nber.org/system/files/working_papers/w16705/w16705.pdf
5 The Economic Consequences of Ageing Populations https://ec.europa.eu/economy_finance/publications/pages/publication11151_en.pdf
6 Health, an ageing labour force, and the economy - NCBI https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8505790/
7 The challenges of Ageing: Fast and slow - S&P Global https://www.spglobal.com/en/research-insights/special-reports/look-forward/the-challenges-of-Ageing-fast-and-slow
8 'Global Trends to 2035' Geo-politics and international power https://www.europarl.europa.eu/thinktank/en/document/EPRS_STU%282017%29603263
9 Geopolitics of climate impacts: implications for the UK's international ... https://www.csap.cam.ac.uk/news/article-geopolitics-climate-impacts-implications-uks-inter/
10 World Needs More Policy Ambition, Private Funds, and Innovation to ... https://www.imf.org/en/Blogs/Articles/2023/11/27/world-needs-more-policy-ambition-private-funds-and-innovation-to-meet-climate-goals
11 Global trends to 2035 | Oxford Analytica https://www.oxan.com/insights/global-trends-to-2035/
12 Climate politics: Why the old diplomacy no longer works https://www.chathamhouse.org/2021/10/climate-politics-why-old-diplomacy-no-longer-works
Marketing communication. This material is provided for informational purposes only and should not be construed as investment advice. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article. All investing involves risk, including the risk of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.