The global economy is being reshaped by AI and climate change, which may either boost productivity or hinder growth. A PwC model outlines three future scenarios:
| name | description | change | 10-year | driving-force | relevancy |
|---|---|---|---|---|---|
| AI-Driven Productivity Revolution | AI is set to revolutionize productivity, potentially leading to substantial economic growth. | Shifting from traditional productivity models to AI-enhanced, high-efficiency systems. | In a decade, businesses may operate with vastly improved efficiency and economic output due to AI. | The continuous advancement and integration of AI technologies across sectors. | 5 |
| Climate Risks Influencing Economic Growth | Physical climate risks are lowering long-standing economic growth expectations globally. | Transitioning from stable growth expectations to uncertainty due to climate impacts. | Expect a more cautious approach to growth as climate risks reshape economic forecasts. | Increasing frequency and severity of climate-related events affecting economies. | 4 |
| Emergence of Trust in Global Standards | Global standards will foster trust and enhance collaboration amid economic changes. | Transition from fragmented standards to universally accepted guidelines fostering cooperation. | In ten years, companies may thrive under shared global standards, enhancing trust and cooperation. | The need for accountability and sustainability in business practices across borders. | 4 |
| Fragmentation of Technology Adoption | Technology adoption may become fragmented leading to mistrust and slowed productivity gains. | Moving from cohesive technology ecosystems to divided, less effective solutions. | Ten years from now, regions may face varied technology capabilities impacting competitiveness. | National interests may overshadow collaborative technological advancement efforts. | 4 |
| Indicators of Business Model Change | Sets of indicators are emerging to signal changes in business models across industries. | Shifting from reactive business strategies to proactive planning based on predicted changes. | In a decade, businesses may be better equipped to adapt rapidly based on predictive indicators. | The urge to remain competitive in a rapidly changing market environment driven by megatrends. | 3 |
| name | description |
|---|---|
| AI Productivity vs Job Displacement | The rapid adoption of AI may lead to significant job losses, countering productivity gains and impacting employment rates. |
| Climate Change Impact on Economic Growth | Physical climate risks such as flooding and drought are expected to dampen economic growth expectations significantly. |
| Geopolitical Instability and Fragmentation | Rising nationalistic and regional interests may hinder technological advancements and economic collaboration, worsening growth prospects. |
| Mistrust in Technology | Erosion of trust in technology could slow down AI benefits and hinder innovation, impacting overall economic productivity. |
| Stranded Asset Costs | The potential high costs associated with decarbonisation and stranded assets may outweigh the economic benefits derived from AI advancements. |
| Regional Growth Disparities | Areas vulnerable to climate change may face larger economic slowdowns, increasing disparity between regions in economic resilience. |
| Long-term Business Planning Uncertainty | The evolving business environment driven by AI and climate change necessitates new strategies, but uncertainty complicates long-term planning. |
| name | description |
|---|---|
| AI-Powered Productivity Acceleration | The integration and responsible use of AI enhances productivity and drives economic growth while supporting sustainable practices. |
| Decarbonization and Economic Growth Balance | Companies prioritize cost-effective decarbonization while aiming for economic expansion, leading to innovative approaches to sustainability. |
| Trust in Technology as a Growth Enabler | Establishing global standards to enhance trust among stakeholders is essential for leveraging technology’s full economic potential. |
| Fragmentation of Technology and Economic Stagnation | Increased national interests lead to fragmented technologies, limiting productivity gains and causing economic growth to stall. |
| Geographic Disparities in AI Adoption | Regions that quickly adopt AI technology experience significant productivity benefits or risks, highlighting the importance of regional strategies. |
| Adaptation to Climate Risks | Businesses must navigate physical climate risks while planning for growth, influencing strategic planning and investment decisions. |
| Proactive Business Model Innovation | Companies are encouraged to reimagine their value propositions to adapt to changing economic landscapes shaped by AI and climate change. |
| name | description |
|---|---|
| Artificial Intelligence (AI) | AI is poised to revolutionize productivity, creating significant economic growth and opportunities for job creation. |
| Climate Adaptation Technologies | Technologies designed to mitigate and adapt to physical climate risks like flooding and drought, impacting economic stability. |
| Trust-Based Technology Standards | Global standards aimed at fostering trust in the use and implementation of advanced technologies among nations and companies. |
| Sustainable Energy Transition Technologies | Technologies supporting the transition to sustainable energy sources while countering climate change impacts on economies. |
| name | description |
|---|---|
| AI-Driven Productivity Revolution | The integration and responsible use of AI technologies could lead to significant productivity growth and economic expansion by 2035. |
| Climate Change Impact on Growth | Physical climate risks may undermine long-standing economic growth expectations, particularly in vulnerable regions. |
| Fragmented Technology Trust | A potential fragmentation of technology due to national interests could hinder AI’s productivity potential and economic growth. |
| Geopolitical Crises and Economic Stability | Emerging geopolitical tensions may destabilize trust in technology, affecting economic benefits and growth projections. |
| Regional Disparities in AI Adoption | Variability in AI adoption across regions may lead to uneven economic benefits and increased vulnerabilities in climate-impacted areas. |
| Long-Term Business Planning | Companies need to focus on long-term success strategies amidst trends of volatility and uncertainty influenced by AI and climate change. |
| Need for Global Standards | The establishment of global standards may help build trust among countries and companies in governing technology use responsibly. |
| Business Model Transformation Indicators | Indicators could emerge to signal impending changes in business models across different sectors, requiring adaptive strategies. |