The World In 2030: Global Trends And Implications
In conversation with Adit Jain, Chairman and Editorial Director, IMA India
Executive Summary
Today’s geopolitical arena will be unrecognisable by 2030, with rising nationalism ushering in a post-globalisation era.
The US-China rivalry will intensify, and its effects will manifest across arenas from technology to energy, trade etc.
Internationally, India will project greater influence, maintaining its independent foreign policy stance and building on existing relationships with Israel, ASEAN, etc.
US-India relations will improve, though a strategic partnership is unlikely.
The BJP’s likely victory in the 2024 elections will strengthen PM Modi’s domestic credibility, translating into a robust power projection globally.
Domestically, the rising tide of cultural nationalism will not ebb anytime soon. Polarisation will intensify, delimitation will increase tensions between India’s regions and the BJP will maintain its hegemony, with only scattered national opposition.
De-dollarisation and the rise of digital currencies will weaken the US dollar.
With the era of cheap money over, interest rates globally will remain high, and fiscal and monetary policy will pull in opposite directions.
India will become a USD 7 trillion economy – the world’s third largest – by 2031.
Regional agreements will undermine the global multilateral trade framework and global supply chains will be replaced by local ones.
Change is the only constant in a world marked by shifting alliances and evolving material conditions. The geopolitical arena we find ourselves in today is likely to be completely unrecognisable by 2030. India’s global role in the coming years is contingent on the strength of its polity and economy which will be shaped largely by the outcome of national election in 2024. What developments should business leaders keep in mind when formulating an organisational strategy looking ahead? At recent joint sessions of the India CEO, CFO and CHRO Forums in Chennai and Hyderabad, Adit Jain, Chairman and Editorial Director of IMA India, presented his outlook for economic and geopolitical trends in the coming decade.
Geopolitics
The following will be major features of the international landscape by 2030:
The US-China rivalry will intensify, with its effects manifesting everywhere from technology to energy and trade.
The liberal world order will be upended by rising nationalism, ushering in a post-globalisation era.
Security arrangements will have to be renegotiated, such as, for instance, the transatlantic alliance in the wake of the Ukraine war, and that between Middle Eastern countries and the United States.
Tensions between China and Taiwan will build up further, as will its border issues with India and South East Asia.
Internal strife within Europe and especially in a post-Merkel Germany will weaken EU unity.
India and the World
India will play an increasingly influential role on the global stage. It is likely to maintain its independent foreign policy stance and build on existing relationships like those with Israel, ASEAN, etc. US-India relations will improve, though a strategic partnership is unlikely. Prime Minister Narendra Modi’s likely win in the 2024 elections will strengthen domestic credibility which will translate into global power projection.
Currency and Markets
The Indian economy is slated to grow to the world’s third largest, with a nominal GDP of over USD 7 trillion – and considerably more in PPP (purchasing power parity) terms. With per-capita incomes exceeding USD 5,500, consumption will zoom, aggregating to upwards of USD 4.5 trillion. New market creation each year in India will exceed that of Japan, Germany and the UK combined.
The dollar’s status as the world’s preeminent currency will erode. Currently, dollars are used roughly 5 times as much as the total value of US imports. This creates a perpetual cycle supporting its lofty status. However, with the growing use of sanctions for political purposes, a rising share of trade may shift to local currencies. Technology will accelerate this trend, especially with the rise of central-bank-issued digital currencies.
Globally, inflation and interest rates will both stay elevated in the medium term, given how badly out-of-sync central banks have been with fiscal policy. As the interest-rate differential between India and the US continues to narrow, the rupee will remain under pressure for at least the next two years.
Trade
Partly due to the weakening nature of the Bretton Woods institutions and other international organisations, by 2030 trade will depend on bilateral relations between nations. Friend-shoring and near-shoring as well as onshoring and reshoring will increase. The use of non-tariff barriers will be the preferred mode of protectionism. Regional agreements will undermine the global multilateral trade framework. Global supply chains will be replaced by local ones.
Black Swan Events
There are some possible Black Swan events that could accelerate these trends or upend them entirely:
Deepening polarisation and domestic squabbling in the US could push it to retreat entirely from global affairs.
In the extreme, social unrest in China could trigger a collapse of that country in its present form. Such an event would have huge repercussions on global supply chains.
A Eurozone break-up and a resultant Balkanisation of Europe would breed conflict and financial- and currency-market uncertainty.
Finally, a fragmentation of the oil-rich Middle East would cause energy prices to spike and fuel regional chaos.