5 Megatrends Shaping our Future

Emerging megatrends are powerful, longterm shifts in the global economy, society and culture that are creating opportunities for individuals, businesses and governments

Software may well be eating the world, but arguably 5 megatrends are shaping our future. These trends are particularly visible in the Gulf and increasingly inform the asset allocation and capital deployment decisions by professional investors. 

Consequently, for funds and projects seeking to raise capital in the region, the prospects for success are greatly enhanced if there is an authentic linkage to one or more of the 5 megatrends we believe are most important.

Before we explore each trend in more detail, let’s first take a look at the current socio-economic backdrop & examine why looking forward is more important now than at any time in the last 50 years.

Younger generations have grown up in the seemingly ‘access all areas’ internet age but their formative years have been undermined by financial crisis & more recently the covid pandemic. War in Europe, spiralling energy & day to day costs alongside a looming recession in many G7 countries all serve to make life very unpredictable. More than ever, we would be well advised to focus on the future, research the winds of change & prepare for a brave new world. However, we must also face up to the disillusionment that survey after survey discovers amongst Generation Z members. Actors with access to capital tend to find adopting mega trends as part of their lives or organisations far more straightforward than our young people. There is considerable work to be done to persuade the leaders of the future that there is much to fight for, much to achieve & the prospects for success in all its guises greater than at any time in history.             

Digital Technology – By 2025 75 billion devices will be connected to the internet. There are 5 billion internet users & over 7 billion mobile phone users. The AI market could hit nearly $2trillion by 2030 & 77% of devices feature AI already. Augmented reality device users will reach 1.4 billion this year. Digital solutions throughout the Middle East are prized and valued.           

Climate Change – The human causal warming of the atmosphere leading to environmental degradation. The Gulf is committed to the transition to a low carbon economy and continues to look favourably on investing in all horizontals and verticals that address renewable energy and sustainable infrastructure.       

Emerging Global Wealth – The world gets wealthier as the 2 largest populations (China & India) start to accumulate assets. Whilst there can be an awkward juxtaposition between the behaviours of the wealthy and a shift to a low carbon economy, the fact remains that the wealth effect of c50% of the world’s population joining the middle classes is profound. It is no accident that the wealthiest family in the world now isn’t a tech sector dynasty but in fact own a diversified luxury goods empire. The inequalities that can result from this trend are also a key focus.           

Demographics & Healthcare – Population ageing given the slow-down in growth & decline in fertility of the birth rate allied to medical innovation. 20% of many developed economy populations are now aged over 65 with birth rates in countries like China now leading to population decrease for the first time in generations. Often associated with medical devices, new treatments, genomics or drugs, we see this megatrend in its widest context. Consumers taking control of their health via better information, health systems doing more with less, food technology, delivery of healthcare outside institutions & mega health cities emerging.            

Urbanisation – An increasing concentration of the world’s population in cities. Half the world already lives in a city and by 2050 that is expected to increase to 75%. In 1970 the world had 2 mega cities, now it has over 25. Re-purposing of vast tracts of existing real estate after covid alongside the development from scratch of conurbations in the new economies are all contained within this trend.     

To conclude, contrary to popular belief, the GCC members have always known and planned for a time when the oil runs out or global politics adjudges hydro-carbons as necessary evils rather than prized assets. Accordingly, leaders throughout the region have embraced technology and innovation for decades to ensure their economies are diversified, modern and forward looking. The sovereign wealth funds, as a convenors of global capital, have invested trillions of dollars in the trends you see above & these commitments will appear a drop in the ocean compared to the investments and progress made by the region over the next 25 years.