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SBF Position Paper
Megatrends shaping Singapore’s Future Economic Strategies and Businesses
www.pwc.com/sg
Ng Siew Quan
PwC Singapore
PwC
What is a Megatrend?
1. Megatrends are macroeconomic forces that are shaping the world. They are factual and often backed by verifiable data.
2. By definition, they are big and include some of society’s biggest challenges— and opportunities. The concept of megatrends is not new.
3. Companies may call megatrends by different names, but most companies have organised their strategy in some way, shape, or form around them.
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Megatrends Overview
• Over the past couple of years, we've been working with clients to understand the big changes that are disrupting their organisations - and the economy as a whole.
• We've distilled what we've learned down into 5 global
shifts that we've seen have a major influence today and that we believe will still be important over the coming decades.
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Five megatrends that will re-shape Singapore’s economic and commercial landscape
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Demographic and social change
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By 2025, the world’s population will hit 8 billion 96% of this population growth will come from emerging or developing countries
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Source: UN Population Division, World Population Prospects 2012
By 2025, we’ll have added another billion people to reach about 8 billion, with the over-65 as the fastest-growing group.
2 core sources of growth & opportunities:
• the consumption power of growing population segments; and
• the innovative potential of a diverse workforce.
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Global Mobility More people are planning to move
• The number of people being employed outside their home country has increased by 25% over the past decade.
• We project a further 50% rise by 2020.
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Moving to a more diverse world The rising potential for diversity in the workplace
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• Organisations will need to embrace an older, more experienced workforce
• Female participation will increase as social changes see mothers having fewer children and at a later stage in life
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Shifts in global economic power
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Shift in global economic power The realignment of the global economy
• Aggregate purchasing power of the ‘E7’ emerging economies1 will overtake that of the G7 by 2030.
• Asia Pacific will have a larger middle class than Europe and North America combined
• Global emerging middle class will represent an annual market of some US$6 trillion by 2021
1: Brazil, China, India, Indonesia, Mexico, Russia and Turkey
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Rebalancing of global economic power Major implications for investments in infrastructure
• Infrastructure spending worldwide est. to grow from US$4 trillion to more than US$9 trillion by 2025 annually
• The Asia Pacific market, driven by China’s growth, will represent nearly 60% of global infrastructure spending by 2025.
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A new view of the global economy The global economic landscape in 10 years’ will be vastly different
features that may become more prominent in the global economy:
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4 • Emerging markets will challenge developed economies in the
production of high-end consumer durables.
• Today’s ‘F7’ frontier markets – Bangladesh, Colombia, Morocco, Nigeria, Peru, Philippines and Vietnam – will become tomorrow’s growth markets.
• An expanding pool of highly skilled talent will fuel this emergence, with people from emerging markets increasingly leading global multinationals.
• Developed countries will benefit from ‘re-shoring’ as wage differentials close.
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Rapid urbanisation
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Rapid urbanisation The global rise of cities has been unprecedented
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• Every week, some 1.5 million people join the urban population, through a combination of migration and childbirth.
• By 2025 there could be nearly 40 cities each with a population over 10 million
• New York, Beijing, Shanghai and London alone will need US$8 trillion in infrastructure investments over the next decade
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Adjusting to greater population density Financial, environmental and social costs
• Cities occupy 0.5% of the world’s surface, but consume 75% of its resources
• Expanding city populations will demand rising investment in urban infrastructure, putting further strains on vital resources
• Need to re-think about the provision of public funding to deal with issues arising out of rapid urbanisation
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Dealing with increasingly urban customer base Challenges and wider opportunities
• New opportunities arising from lifestyles shaped by rising population density and readier access to resources
• Businesses need to refocus their offerings, marketing and distribution to cater to such changes
• Leveraging technology to support growth; building a “smart” city
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Climate change and resource scarcity
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Climate change and resource scarcity A finite amount of natural resource
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• Demand for energy, food and water will rise as the world becomes more populous, urbanised and prosperous
• Likely to miss the carbon target to keep temperature rises to 2°C by 2034
• About half a century’s worth of oil and gas left based on current consumption
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Link between climate change & resource scarcity Impact of our current economic development model
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extreme outcomes: 2 • a policy shock, with a global agreement
that severely penalises carbon emissions; or
• a climate or resource shock, where a natural event causes massive environmental and economic damage.
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The need for sustainability Corporate responsibility has evolved from a ‘luxury’ to a business imperative
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• An increasingly important area of focus for businesses worldwide is measuring and understanding the environmental and social impacts of the decisions and actions they take
• Businesses need to be able to report on sustainability in a credible and trustworthy way
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Technological breakthroughs
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Technological breakthroughs The force of disruption
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• Technological breakthroughs are rapidly changing the way we conduct businesses
• Digitisation via the internet has created extraordinary value
• Social media is steadily strengthening its position as a dominant force, enabling many of the world’s top brands to deepen their relationships with their customers
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Technological breakthroughs The force of disruption
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• 81% of CEOs surveyed by PwC identified technological advances as driving transformation in their business over the next five years
• The time it takes to go from breakthrough technology to mass-market application is collapsing
• Price of new technologies is falling equally rapidly: cost of DNA sequencing per genome has plunged from US$96m in 2001 to less than US$6,000 today.
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So, what’s next?
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We predict the transformative potential of digital for
consumers will play out in 3 waves:
More companies will adopt ‘e-commerce’ or add a web channel to their existing portfolio.
Digital will move beyond a channel to an ‘economy of outcomes’, with businesses working with the consumer to develop solutions.
Consumers taking back their digital identity and extracting value from it, expecting businesses to know what they want and to really deal with them as individuals.
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Conclusion
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Summary
• Whilst megatrends seem big and long-term, the implications and the effects can be very short-term.
• Challenges and opportunities arise not from looking at the effect of one of the megatrends, but instead at the interaction between several.
• This impact has the potential to significantly disrupt the business landscape around them.
• The sharing economy is a collision of megatrends and that offers both opportunities and risks.
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What does this all mean?
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As the megatrends evolve and collide, the sharing economy is becoming an increasingly accepted feature of the business landscape. It is about consuming in a different way – around sharing or renting, rather than buying or owning.
The sharing
economy affecting
industries
Thank you.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon
the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to
the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its
members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or
refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2016 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.
Ng Siew Quan Partner Tel: +65 6236 3818 Email : [email protected]
