Four Takeaways from the 2022 Davos Economic Forum
Life is finally going back to the pre-pandemic normalcy. In person global summits have regained their place in top executive and politician’s calendars. In May 2022, global leaders met in Davos Switzerland for the World Economic Forum (WEF), to discuss economic trends and global risk. This summit was different though, as it was influenced by the war in Ukraine, unprecedented high interest rates (ranging between 8–20% across the US and the EU), and a potential global recession. Keeping in mind these underlying risks, here following are four striking takeaways that will shape our lives going forward.
1. Climate Sustainability: The climate dialogue continues to be the biggest risk/opportunity discussed in Davos. Global leaders announced the expansion of the First Movers Coalition, a program designed to scale up climate mitigation and adaptation investments. Bill Gates is the leader of the movement, supported the US Climate Envoy John Kerry. The key objective of this program is to ensure that corporations commit to buying specific amounts of green coal, green steel, green hydrogen, green cement, green aluminum, and carbon removal so that companies, entrepreneurs, and financiers get the market signals to invest now to meet that future demand. The “First Movers Corporations” that committed to buy these future green products are, Apple, Ford, Google, FedEx, Microsoft, Boeing, just to name a few. This confirms that large corporations are doing their parts to reach the net-zero 2050 objectives as outlined during the COP26 Climate Summit of 2021. The key lesson here is that there will be massive jobs, business and investment opportunities around decarbonization and green transition.
2. The metaverse will become omnipresent: WEF presented a virtual Global Collaboration Village which is spearheading in order to bring the metaverse technology to global fruition. In collaboration with Accenture and Microsoft Corporation, WEF is launching its metaverse platform to scale global digital partnership and enable billions of people to benefit from this digital opportunity. The Metaverse was clearly one of the winners in Davos where public and private sectors coordination is being streamlined. In 2022 we expect at least $ 50 billion going into the Metaverse space from VCs alone. Furthermore, according to Morgan Stanley the metaverse economy will have “an $8 trillion addressable market in less than 10 years”. Morgan Stanley also estimates that metaverse represents a revenue opportunity of $56 billion by 2030 for luxury goods. These investments will take the decentralized work to a new high level, accelerating digital partnership and decarbonizing further our economies. The key lesson here is, there are massive business opportunity for digital service providers in social media, health care and entertainment.
3. Recession fears are here to stay: Most industry leaders at Davos expect a global recession towards the end of 2022. Due to macroeconomic pressures and geopolitical risks, it is hard not to expect a turbulent 2022 where energy price pressure will influence all economic activities. Faith Bairol, Managing Director of the International Energy Agency (IEA) said that “the current energy crisis could be one of the worst and longest in history and European countries could be hit particularly hard”. The International Monetary Fund (IMF) Managing Director Kristalina Georgieva, stressed the importance to learn to live with multiple crisis at the same time repeating several times that countries should embrace resilience to “better prepare for shocks such as climate change”. The key lesson here is, invest in proactive resilience and learn from recent crisis to leverage the lessons learned.
4. The future of work will be based on digital transformation: While the digital skill set needed to accelerate the digital transition are in short supply, the global marketplace has taken good steps toward massive adoption of the digital skill set needed. Most of the jobs in the near future will be anchored in digital skill capabilities, underscoring the need to accelerate digital capacity building for all. According to the WEC, the transition to a “new nature economy” could create nearly 400 million resilient jobs by 2030. Of these, 87% of the business opportunities that create these jobs are highly dependent on Fourth Industrial Revolution technologies. According to Microsoft, by 2025 there will be 149 million new digital jobs in areas like privacy, cybersecurity, data analysis, machine learning and AI, and software development. The key lessons here is, corporations need to “re-skill and upskill” their teams to embrace innovation and digital transformation. These that do this will outperform the markets.
· Decarbonizing is possible if the right technologies are brought to commercial scale by 2030.
· Digitalization will be the name of the game for our economic future, and those companies that invest in cutting-edge innovation and digitizing skills will be the new front-runners.
· Never waste a good crisis as this create the opportunity to innovate and remove established practices that may no longer make sense in the new digital economy.