Trends 2025 - Suresh Srinivasan

A recent report titled ‘Global Trends 2025’ released by the National Intelligence Council, which is a part of the Government of the United States, analyses the challenges faced by the global economy as we stand in 2008. It also forecasts the likely trends of growth of prominent countries, how they are positioned to deal with the challenges and opportunities and makes an assessment as to how the profile of the key players would be by the year 2025. The report also brings out the major opportunities and threats faced by the world and evaluates the strengths and weaknesses of the current super-powers and other developing nations.

Some key issues brought out in the report could be summarized as follows:

(1) Flow of Power from the West to the East
Although the USA is expected to continue as the largest power centre in the world, by 2025, its strength and the sphere of its influence on the rest of the world, especially in terms of economic and military power, are likely to be largely diminished.  A large part of the economic and military power that the US currently enjoys is likely to be transferred to the East, especially to China and India. Although Europe and Japan will continue to have a higher per capita wealth as compared to the other nations in the East, they will struggle to maintain a robust growth rate in GDP, primarily due to the size of the working-age population in these regions, which are projected to sharply decrease. While the world will see immense prosperity, this prosperity would be driven more from the East.

What factors will drive this transfer of power?
The aging population in the West and the high ratio of working population in pockets of the East will be one of the major drivers of this transformation. The US will witness a partial exception to the demographic phenomenon of aging population across nations in the developed world, as it is expected to experience higher birth rates and more immigration.
Secondly, increases in oil and commodity prices will generate windfall profits for the Gulf States and Russia. This will to a large extent transfer power to the Eastern part of the world.
Thirdly, lower costs, combined with government policies, have shifted the locus of manufacturing and some service industries to Asia. More and more businesses are expected to be positioned in these so-called ‘low wage destinations,’ which will become the epicenter of global economic development.

Emerging Economies that will be a force to reckon with
The report, taking into account growth projections, predicts that Brazil, Russia, India, and China (the BRIC) are collectively likely to match the original G-7’s share of global GDP by 2040-2050. China is poised to have more impact on the world over the next 20 years than any other country. By 2025, China is expected to have the world’s second largest economy and will be a leading military power. It would also be positioned as the world’s largest importer of natural resources and on the flip-side, perhaps the biggest polluter. The report predicts that India will continue to enjoy relatively rapid economic growth and will be a key nation in global politics. The report also predicts that Russia has the potential to be richer, more powerful, and more self-assured by 2025. The political and economic power of other countries such as Indonesia, Iran, and Turkey are also expected to increase. Other rising powers such as South Korea, Taiwan, and Singapore are predicted to prosper.

It is disturbing to note that Africa will remain most vulnerable to economic disruption, population stress, civil conflict, and political instability despite increased global demand for commodities for which Sub-Saharan Africa will be a major supplier.

(2) Issues that confront the global economy
The biggest challenges facing the world will be those related to growing energy, food, and water constraints; worries about climate change will limit and diminish what is still likely to be a historically unprecedented age of prosperity. Resource issues will top the international agenda. Access to strategic resources, including energy, food, and water, especially in a situation where demand is projected to far outstrip supply, would definitely be top priority for all countries. Oil and gas production will be concentrated in unstable areas, and does not seem likely to be able to keep pace with growing demand. As a result of this and other factors, the world will be in the midst of a fundamental energy transition away from oil toward natural gas, coal and other alternatives.

Terrorism, proliferation and conflict driven by the need to control commodities will remain key concerns even as resource issues move up on the international agenda. Terrorism will most probably continue unabated if economic growth continues and youth unemployment is not mitigated in the Middle East. A more important expectation is that terrorist groups, in 2025, will be in a position to conduct sophisticated attacks as a result of diffusion in technologies and scientific knowledge which will place some of the world’s most dangerous capabilities within their reach. One of the world’s greatest concerns continues to be that terrorists might acquire and employ biological agents, or less likely, a nuclear device, to create mass casualties. Also, it is expected that as a result of these developments, the ability of the global governance structure will vastly reduce.

Although the impact of climate change will vary by region, a number of regions will begin to suffer harmful effects, particularly water scarcity and loss of agricultural production. Today, experts consider 21 countries, with a combined population of about 600 million, to be ‘fresh water’ scarce; this is likely to grow to 36 countries, with about 1.4 billion people, who will be expected to fall into this category by 2025.

The report expects the strategic rivalries between countries to revolve most often around trade, investments, and technological innovation and acquisition; arms races, territorial expansion, and military rivalries could also be prevalent.

(3) Key players & groups who will influence significantly on global policies
The report expects various non state actors (other than national governments), including businesses, tribes, religious organizations, and criminal networks to rise in importance as well as in terms of their level of global influence.

While the report from the National Intelligence Council identifies the above key trends and the strategic factors underlying them, it also points out that none of the predictions are definitive and no trend immutable, very justifiably pointing out that “timely and well-informed intervention can decrease the likelihood and severity of negative developments and increase the likelihood of positive ones.”