Insights on Future Economic Trends

Notes from my Diary: Davos 2025 - Where 3,000 of the world’s most influential minds converge to debate the future of humanity. Meetings & Encounters—In just five days, I had 60+ meetings and fateful encounters with a mix of CEOs, Asset Managers, Politicians, Founders, Industry Captains, and even Protesters. Each conversation had unique perspectives, but one theme stood tall: everyone is hungry for growth. Key Takeaways: Global optimism runs really high. Business leaders have been the most optimistic since the pandemic. Focus on near-term growth; the long term is unpredictable. K-shaped recovery dominates discussions, with a 50% probability of playing out. Corporate Insight - Less than 33% of employees believe in their leadership’s ability to drive growth, and only 15% feel highly engaged. Liquidity Abounds- Governments, corporations, and funds are ready to invest in ideas with potential as they all sit on cash. Gold is a walk-the-talk as ultra-high-net-worth families are hoarding it like central banks. Spotlight on Trends AI Everywhere: Artificial Intelligence was the most frequently heard word. While leaders are excited, there’s a collective call for governance and ethical frameworks. De-Centralized AI a Myth? Wildest idea? Advanced Superintelligence (ASI) may one day unify humanity and even replace religion. Automation + Robotics Driving AI’s flywheel. Meanwhile, Quantum Computing hasn’t hit scale, so it’s flying under the radar. Energy Revolution Cleantech, nuclear energy, and ocean-based solutions stole the show. Fun fact: By 2030, 20% of global energy may be consumed by AI/data centers. Healthcare Breakthroughs Longevity is real—many alive today could hit 100+ years, but the real challenge? Mental health. Demographics Dilemma With aging populations in Europe and Asia, replacement rates are dropping. Consumption will need longevity to avoid falling off a cliff. Key Regional Highlights United States The new administration’s policies on tariffs, energy, and immigration dominate global attention. AI governance and TikTok remain hot-button topics. China Underrepresented, but everyone’s watching. Asset managers hope for a US-China deal. India The standout star! From politicians to startup founders, India owned Davos 2025. States like Maharashtra and Andhra Pradesh are on multi-trillion-dollar trajectories. Saudi Arabia Positioned for explosive growth, with projects like Neom and aspirations for FIFA and the Olympics by 2035. Top 5 Skills of the Future: Resilience Adaptability High Learning Rate Empathy Creativity Corporate Roles on the Rise: Technology Offices Corporate Strategy New-Age HR (think AI-powered employees) Corporate Communications PR for Influencers Final Thoughts Davos isn’t just a summit—it’s a whirlwind of ideas, challenges, and solutions shaping tomorrow. My 18,000 daily steps (in freezing cold!) were fueled by the world’s cleanest air and water and a relentless curiosity to learn. World Economic Forum

This week’s inflation report, though market constructive, continued to underscore the bifurcation taking place between the goods and services sectors of the economy. Key things to note:   *While services inflation remains high in absolute terms, its growth is now downward sloping and is helping to keep core CPI contained. See below, but our forecast is that real incomes are starting to turn positive across a wider swath of U.S. consumers. That is a good thing. That said, we are not out of the woods yet as we expect continued volatility in goods inflation in the coming months, driven by tariffs, wildfires, and outbreaks of bird flu.   *In light of these upward pressures on goods prices, we have adjusted our 2025 headline CPI forecast slightly to 2.8%, up from 2.6% (vs. consensus of 2.5%). Importantly, Fed tightenings and easings are not affecting financial conditions as much as in the past. Key to our thinking is that many of the big corporate capex spenders don’t have as much debt on their balance sheet this cycle. On the interest rate front, we stick with two cuts this year, while we expect the 10-year to trade in the 4.5-4.75% range.    Bigger picture, while our Regime Change thesis does not foresee runaway inflation, we still see a higher resting heart rate this cycle, marked by increased variability due to 1) larger deficits; 2) geopolitical tensions; 3) a complex energy transition; and 4) persistent inflationary trends. At KKR we spend time on longer-term trends, which suggest the following mega-themes:   1. Productivity Enhancements: As input costs, including wages, rise, companies will increasingly prioritize resource allocation toward boosting productivity. 2. Capitalize on Diverse Opportunities: We are strategically targeting both capital-heavy and capital-light investments across sectors such as insurance, consumer receivables, and housing, as well as through corporate carve-outs, particularly in Private Equity and Infrastructure. 3. Supply Chain Resilience: Corporations are seeking greater resilience in global supply chains, emphasizing the security of data, transportation, water, and energy. As the global economy shifts toward more regional models, the need for investment in these areas could reach trillions of dollars. 4. Picks and Shovels of AI: We anticipate substantial government investment aimed at securing energy sources. The demand for data centers, pipelines, cooling technologies, and related services is set to grow significantly, driven by a mega-theme where nearly 25% of total tech capital expenditure originates from the Mag7. 5. Collateral-Backed Cash Flows: We remain positive on investments that generate collateral-based cash flows within Infra, Asset-Based Finance, certain Real Estate sectors, and specific Energy segments. In a rising nominal GDP environment, we expect these assets to appreciate in value, leading to potential multiple expansions across this thematic. Read more at https://go.kkr.com/42dBKkM

J.P.Morgan's Global Research’s Mid-Year Outlook Report was released Friday. Here are 5 top highlights from our flagship report 🌍 🌎 Economics 🔹 Global core inflation is expected to remain close to 3% this year as tight labor markets and elevated wage gains limit service sector disinflation. 🔹 We expect US growth to continue to moderate with a 1.0% average growth pace for the remainder of the year and predict the Fed will cut rates at the November FOMC meeting and continue at a quarterly cadence in 2025. 🔹 Our China forecast for 2024 GDP growth stands at 5.2%yoy, assuming the quarterly growth will return to 4.5%q/q saar in 2H. Equities 🔹 In the US, “higher for longer” has favored size and quality spreads relative to an average company that is more cyclical and rate sensitive. These beneficiaries were amplified by the mania in AI/LLM stocks to a point where Momentum Crowding and Stock Concentration are now at multi-decade extremes. 🔹 For this trend to continue in 2H, S&P 500 Mega Caps will need to keep revising estimates higher and maintain price momentum. We expect this will be a challenge with the hurdle for consensus growth high while valuation and investor positioning are at or near highs of this cycle. 🔹 Japan could perform well in 2H24 on the likely stabilization in FX. It’s too early to move the Eurozone to an outright OW vs. the US, with the potential for a better entry point in 2H, post clarity on French politics. For EM, there is less excitement. ↖ ↘ Rates & Credit 🔹 The market’s Fed expectations remain the dominant driver of Treasury yields, and are likely to be the key factor In determining the direction of travel over 2H24. We believe there is still room for yields to decline. 🔹 In US High Grade Credit, spreads can stay tight with still-strong technicals driven by high yields, a slowdown in supply, an expected improvement in corporate earnings and the start of Fed policy easing in 2H24. 🔹 We remain constructive on HG credit and forecast high-yield bond and leveraged loan default rates to end 2024 at 2.00% and 3.75%, respectively. 💴 💶 💷 FX The bullish USD view remains intact in the medium term, driven by two key factors. 1️⃣ The dollar's considerable yield advantage persists, with 40% of global central banks already cutting rates. 2️⃣ US growth exceptionalism still lingers, despite moderated US growth and an improving outlook in Europe and stabilizing growth in China. 🛢 Commodities 🔹 With concerns about economic growth diminishing, we believe the recent decline in commodities is only temporary. 🔹 Underpinning our constructive BCOM Index and sectoral recommendations is the expectation that in addition to supportive fundamentals over the next few months, commodities would be likely exposed to a confluence of forces, among them weather-related volatility, China’s Third Plenum, and the onset of the Fed’s rate cutting cycle. #investing #markets #jpmorgan

📈 DEAN Series: Interpreting GDP for Smarter Energy and Economic Decisions Every form of economic activity depends on energy—and energy demand, in turn, is shaped by the health of the broader economy. GDP trends influence inflation, job growth, trade, and investment decisions across sectors. Whether you're in energy, finance, policy, or business, understanding where the economy is headed is essential. With TXOGA’s Quarterly Energy Economics Review covering deeper technical topics, I’ve also received questions about how to make sense of the mainstream indicators we monitor. That’s why I’m launching a new series: Demystifying Energy Analysis and Navigation (DEAN) This first installment takes a closer look at GDP—how it's measured, where the global economy stands, and what it means for energy demand and long-term planning. 🔹 1. Why GDP matters. GDP is more than a headline—it’s the foundation for understanding economic well-being. It directly captures spending, investment, and trade, and indirectly signals inflation, jobs, corporate profits, and real income. Energy demand, particularly for oil and natural gas, has long tracked closely with GDP growth. 🔹 2. How we measure it. We use IMF GDP data in U.S. dollars using market exchange rates (MER)—not purchasing power parity (PPP). MER avoids overstating the size of emerging markets (which PPP can inflate ~3x), offering a more grounded perspective for global energy modeling. 🔹 3. What it shows today. Global GDP averaged 3.0% from 2022–2024 but is slowing. The IMF now forecasts 2.4% growth for 2025–2026—nearing recessionary territory, especially given its typical optimism. The outlook still assumes: 4.0% growth in China, 1.8% in the U.S., and 0.6% in Japan. Yet the U.S. economy contracted in Q1, even with consumption pulled forward in anticipation of trade policy changes. 🔹 4. What to watch. Though GDP itself hasn’t signaled a downturn, warning signs are flashing: • U.S. consumer sentiment is at historic lows • Loan delinquencies (90+ days) are rising • Global trade volumes are expected to fall • Bond yields are climbing • The U.S. dollar is down over 6% YTD High-frequency indicators like the Philadelphia Fed’s ADS index point to clear deceleration—not collapse, but enough to raise red flags, especially with structural shifts on the horizon. 🔹 Key takeaways •   GDP trends are central to energy and economic planning •   Measurement methods matter for interpreting global demand •   Slowing growth suggests mounting risk across markets •   Leading indicators reveal more strain than headlines suggest •   Long-term energy investment must account for structural shifts More to come in the DEAN series as we bridge macroeconomic signals and energy market implications. #EnergyEconomics #OilAndGas #GDP #DEAN

As I reflect on economic data reported by Bloomberg, one thing is clear: the global economy is navigating a complex and intensifying push-pull dynamic shaped by inflationary aftershocks, divergent growth rates, and policy recalibrations. The numbers tell a compelling story. The US economy remains resilient, with fourth-quarter GDP expected to increase by 2.7%, driven by strong consumer spending and a robust labor market. In contrast, Europe is grappling with stagnation, while Asia presents a mixed bag of opportunities and challenges. Central banks across the globe are carefully calibrating policies to balance inflation risks, growth ambitions, and geopolitical uncertainties. For corporate finance leaders, these signals demand strategic reflection. Here’s how I’m interpreting the landscape: - US personal consumption exceeded 3% growth for two consecutive quarters, powered by a strong labor market. However, rising delinquency rates among lower-income households hint at potential cracks beneath the surface. Companies targeting affluent consumers may see more stable growth, but businesses across all sectors should prepare for shifts in spending patterns. - The Federal Reserve is expected to hold rates steady, with only limited cuts projected for the year. This signals that the cost of capital will remain elevated, underscoring the importance of disciplined capital allocation and careful management of debt tied to SOFR. Maintaining liquidity and flexibility will be critical as borrowing conditions remain tight. - The US continues to outperform, but Europe is stalled, and Asia remains uneven. While Japan shows strength, headwinds in China and elsewhere may limit broader regional momentum. For multinational firms, the U.S. remains a reliable growth engine, but global demand dynamics could weigh on export-driven strategies. - Heightened tariff uncertainty and evolving US trade measures could disrupt supply chains and increase costs. Companies should proactively assess exposure to potential trade disruptions and consider regional diversification strategies. 2025 is shaping up to be a year that rewards thoughtful, data-driven finance teams. It will be interesting to see how divergent monetary policies and country-by-country trade tensions play out on the global stage. #finance #business #economy #policy #inflation #financeinsights

"Most of the developing world is turning into a development-free zone" is the rather grim title of a blog by our The World Bank World Bank Development Economics Chief Economist Indermit Gill and Deputy Chief Economist M. Ayhan Kose. Building on the June 2025 Global Economic Prospects report they highlight some bad news: 📉 International trade discord has disrupted long-standing policies that once supported poverty reduction and prosperity. 📊 Global GDP growth is forecast to drop to 2.3% this year—its weakest in 17 years outside of recessions. 📆 By 2027, global GDP growth is expected to average just 2.5% for the 2020s—the slowest pace since the 1960s. 🌍 The poorest countries will be hit hardest, with many developing economies becoming “development-free zones.” 💸 By 2027, per capita GDP in developing economies (excluding China) will be 6% below pre-pandemic expectations. 📉 Growth in developing economies has declined for three straight decades—from 5.9% in the 2000s to 3.7% in the 2020s. 📦 Global trade growth has also slowed—from 5.1% in the 2000s to 2.6% in the 2020s. 🏗️ Investment is weakening while debt levels are rising. 🔄 Many of the forces that once drove global development have reversed. 🕰️ Opportunities for easy policy fixes—like those enabled by low interest rates—have passed. 🧍 Policymakers have largely remained passive, hoping for spontaneous improvement. What could be way forward? Priorities include: 🔁 Rebuild trade relations by reducing tariffs, deepening trade agreements, and restoring a rules-based global trade system to boost growth. 💰 Restore fiscal order through better revenue collection, smarter subsidies, and stronger debt management. 👷 Accelerate job creation to meet the demands of booming working-age populations, especially in Sub-Saharan Africa, South Asia, and MENA. 📒 Blog: https://lnkd.in/gwiuka7x 📕 June 2025 GEP: https://lnkd.in/guMk4HGy

According to the World Economic Forum, "technological change, geoeconomic fragmentation, economic uncertainty, demographic shifts and the green transition — individually and in combination — are among the major drivers that are expected to shape and transform the global labor market by 2030." [1] Tech changes: Broadening digital access is anticipated to be the most transformative trend, "with 60% of employers expecting it to transform their business by 2030". Advancements in technology (AI + information processing) are also expected to drive both the fastest-growing and fastest-declining roles, and fuel demand for technology-related skills. [2] Economic factors: Increasing cost of living is the second most transformative trend, with economic slowdown remaining top of mind. Slower job growth and mixed outlook for inflation will likely drive an increase in demand for creative thinking and resilience, flexibility, and agility skills. [3] Green transition: Climate-change mitigation is the third-most transformative trend overall, driving demand for roles such as renewable energy engineers, environmental engineers, and electric and autonomous vehicle specialists. [4] Demographic shifts: Perhaps the most interesting trend of all (for me, at least), is the one around demographic shifts. Aging and declining working age populations in higher-income economies and expanding working age populations in lower-income economies are reshaping the labor markets. Aging populations will likely drive growth in healthcare jobs while growing working-age populations will fuel demand for educators. [5] Geopolitical dynamics: Geoeconomic fragmentation and geopolitical tensions are expected to drive changes in the operations of businesses, including offsohring and reshoring. Also a few interesting items to note in the report: * Technology-related roles are the fastest growing jobs (in percentage terms), including "Big Data Specialists, Fintech Engineers, AI and Machine Learning Specialists". Meanwhile, Clerical and Secretarial Workers are expected to see the largest decline (in absolute numbers). ** Due to change in demand for skillsets, the need to upskill and reskill workforce is urgent. According to the WEF report, "if the world’s workforce was made up of 100 people, 59 would need training by 2030". This is significant. It is no wonder that 63% of employers identify skills gap as a major barrier to business transformation in the next five years. #AI #Fintech #FinancialServices #FutureOfWork #BankingOnAI

Global Economics Paper by Goldman Sachs Long-term growth projections for the BRICS+ economies [104 countries by 2075]. We identify four major themes for the global economy: Theme #1: Slower global potential growth, led by weaker population growth. Our projections imply that global growth will average a little under 3% per year over the next ten years and will be on a gradually declining path, primarily reflecting slower labour force growth. Global population growth has halved over the past 50 years, from 2% per year to less than 1%, and is expected to fall to close to zero by 2075. Theme #2: EM convergence remains intact, led by Asia’s powerhouses. Although real GDP growth has slowed in both developed and emerging economies, in relative terms EM growth continues to outstrip DM growth. Our projections imply that the world’s five largest economies in 2050 (measured in real USD) will be China, the US, India, Indonesia, and Germany (with Indonesia displacing Brazil and Russia among the largest EMs). By 2075, with the appropriate policies and institutions, Nigeria, Pakistan and Egypt could be among the world’s largest economies. Theme #3: A decade of US exceptionalism that is unlikely to be repeated. The US’s relative performance has been stronger than expected over the past decade. However, history suggests it is unlikely to repeat this over the next decade. US potential growth remains significantly lower than that of large EM economies, and we expect some of the US Dollar’s exceptional strength of recent years to be unwound over the next 10 years. Theme #4: Less global inequality, more local inequality. Twenty years of EM convergence has resulted in a more equal distribution of global incomes. However, while income inequality between countries has fallen, income inequality within countries has risen. This poses a major challenge to the future of globalisation. #economy #society #strategy #diplomacy #politics #employment #trade #influencer #topvoice

Economic policymakers are grappling with elevated uncertainty, trade tensions, and effective tariff rates reaching levels not seen in a century. Our April 2025 World Economic Outlook shows a range of global growth projections. Our reference forecast, reflecting policies as of April 4, shows global growth declining to 2.8% in 2025 and 3% in 2026, down from 3.3% in the January Update. Despite the slowdown, global growth remains above recession levels.    The path forward demands clarity and urgent action. Countries should work constructively to promote a stable trade environment, manage difficult policy tradeoffs, rebuild fiscal space, and accelerate structural reforms to boost resilience and growth. 

AI's Bilateral Impact on the Economy and Society Artificial Intelligence (AI) is rapidly reshaping the global economic landscape. It presents a classic "bilateral" scenario of significant job displacement alongside prolific job creation. This transformative wave, much like the historical shifts from vinyl to tapes to digital music, is set to redefine not only how we work but also the very fabric of our society. Understanding this duality is key to overcoming the challenges and harnessing the opportunities of the AI era.   Job Losses and Gains There's no denying AI's potential to automate a vast array of tasks currently performed by humans. Initial research and reports highlight a significant impact, particularly on roles that are repetitive, data-driven, or involve routine cognitive work. However, this is only one side of the coin. AI is also a powerful engine for job creation. The development, implementation, and maintenance of AI systems themselves are generating a surge in demand for skilled professionals. McKinsey estimates that AI could contribute trillions of dollars to the global economy, indicating a substantial potential for overall growth that can fuel new employment opportunities. AI is not just about replacing human labor. It is about fundamentally changing the nature of work and the types of jobs available.   Beyond the Balance Sheet The economic shifts driven by AI will inevitably lead to profound societal transformations. Several key areas are likely to be impacted: ➜ Shifting Skill Demands and Education ➜ Income Inequality and Social Safety Nets ➜ The Nature of Work and Work-Life Balance ➜ Ethical Considerations and Governance ➜ Healthcare and Quality of Life ➜ Human Interaction and Community Most Sought-After Jobs in a Decade Looking ahead ten years, the jobs most in demand will largely be those that either directly involve AI development and deployment or those that require uniquely human skills that AI cannot easily replicate. Based on current trends and expert predictions, these include: ➥ AI and Machine Learning Specialists/Engineers ➥ Data Scientists and Analysts ➥ AI Ethics and Governance Officers ➥ Robotics Engineers ➥ Cybersecurity Analysts ➥ Human-Machine Interaction Designers ➥ AI-Assisted Healthcare Professionals ➥ Personalized Learning Designers ➥ Creative Professionals (with AI augmentation) ➥ Jobs Requiring High Emotional Intelligence and Interpersonal Skills ➥ Climate Adaptation Engineers and Sustainability Specialists   Adaptation is Key The transition driven by AI, like all major technological shifts, will undoubtedly create disruptions. Some jobs will become obsolete, while new ones, many of which we can't even fully envision yet, will emerge. The key to navigating this transformation lies in adaptability, continuous learning, and a proactive approach from individuals, businesses, and governments. #ai #jobs #industryshift P.S. What are your thoughts?