The McKinsey Quarterly recently included a web-only article on ten trends for the coming years. You can subscribe for free to their online version if you are interested. I thought it would be worth mentioning these trends to help identify any investment implications.
Trend 1: Centers of economic activity will shift profoundly, not just globally, but also regionally. Asia’s GDP (excluding Japan accounts for 13 percent of world GDP, while Western Europe accounts for more than 30 percent) will catch up with Western Europe within the next 20 years. As a result we should see a growing demand for consumer goods as the people in these nations gain more disposable income.
Investment idea: Consumer companies with a strong presence in Asia and transportation companies that have a strong presence in the region and have global reach.
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Trend 2: Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector. The demand for health and retirement security will overwhelm a nation’s ability to support these services through taxes. Proven private-sector approaches will likely become pervasive in the provision of social services in both the developed and the developing worlds.
Investment idea: Companies that can provide these services in a cost effective manner; firms that can leverage technology to outsource these services to low cost countries.
Trend 3: The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income–a point when people generally begin to spend on discretionary goods. By 2015 consumer’s spending power in emerging economies will nearly match the spending power of western Europe. It is estimated that 1