Executives assume a broader leadership role amid geopolitical tensions, technological disruption, and economic uncertainty.
Assessing the likelihood of global developments
Global Volatility Ahead
There is strong consensus among the global C-suite regarding all 10 of the potential developments we asked them to assess (see figure 1). From the rising dangers of fake news campaigns to the likelihood of a hard Brexit, executives see increased risks in the coming year.
While executives also predict significant upsides, particularly those arising from artificial intelligence (AI) and the strengthening economic potential of Asia-Pacific markets, the overall outlook is sobering.
Most notably, executives expect a shift away from globalization and toward increased protectionism and mercantilism—particularly as trade tensions between key markets continue to rise.
The development eliciting the highest level of agreement among executives, importantly, is that China will play a more dominant leadership role in globalization initiatives. This result clearly reflects Beijing’s rising political, economic, and military profile. In the context of a worsening trade conflict with the United States, Beijing’s rhetoric has shifted toward more unequivocal support for multilateralism and free trade.
At the Shanghai Cooperation Organization summit in June 2018, for instance, Chinese President Xi Jinping urged the international community to “maintain the rules of the World Trade Organization, support the multilateral trade system and build an open global economy.”
China is pushing for an expeditious conclusion of the Regional Comprehensive Economic Partnership (RCEP) free trade agreement, while its Belt and Road Initiative infrastructure projects are increasing political and economic linkages between China and Europe, Africa, and the rest of Asia.1
Executives also strongly agree on the tremendous opportunities in digitization and technological innovation.
A full 71 percent expect AI to have transformative effects for economic growth and competitiveness. This finding is unsurprising, as AI is already present in digital assistants, predictive analytics software, self-driving cars, and innovative applications of machine learning across a broad spectrum of areas, including industrial robotics and engineering.
The adoption of AI, however, is still at an embryonic stage across organizations, and its game-changing potential may not be fully realized for years. Executives, then, may be overly optimistic about a rapid deployment of the technology over the next 12 months.
1 - The signatories of RCEP are Australia, Brunei, China, Cambodia, India, Indonesia, Japan, Laos, Malaysia, Myanmar, the Philippines, Singapore, South Korea, New Zealand, Thailand, and Vietnam.
Read the full report here.
