Economic Forces

The World in 2025: The Economy

In an age of uncertainty, peering 15 years into the future may not seem appropriate. However ignoring long-term trends and being unresponsive to the changing demands of the future is fatal. Understanding the long-term future is vital in ensuring that strategies are sustainable, that opportunities are identified at an early stage and that challenges are addressed before they become insurmountable. At the start of 1990s, China was largely a planned economy, and the Soviet Union still existed. Few people had heard of the Internet and e-mail seemed closer to science fiction than reality.
Globalized Economy
The next 15 years will bring further massive changes to the shape of the world economy, to the landscape of major industries and to the workings of any company. A shift in economic power from west to east will result from two key trends:
Sustained increases in oil and commodity prices have generated windfall profits for the Gulf states and Russia. Relatively low labor costs combined with certain government policies have shifted the locus of manufacturing and some service industries to Asia.
Rise of Emerging Economies
China and India will likely surpass the GDP of all other economies except US and Japan by 2025. Relatively low labor costs combined with certain government policies have shifted the locus of manufacturing and some service industries to Asia. Strong global demand for these products has made wide economies of scale margins across Asia, particularly China and India. These shifts in demand and supply are deep and structural, which suggests that the resulting transfer of economic power we are witnessing is likely to endure. Many anticipate that emerging and developing economies will account for nearly 60% of world GDP by 2030.
Multipolar Financial Landscape
The emergence of a global and multipolar financial order signals a relative decline of US power and a likely increase in market competition and complexity. Over time, these multiple financial centers may create redundancies that help insulate the markets against financial shocks and currency crisis. Anchored by the US and EU in the West, Russia and the GCC states in Central Asia and the Middle East, and China and eventually India in the East, the financial landscape for the first time will be genuinely global and multipolar.

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Economic Forces

Overview: The next 15 years will bring massive changes to the world economy, the landscape of major industries and the workings of companies. This page provides an overview of the major economic forces that will shape the world CPAs inhabit in 2025.
Published on March 27, 2011

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