www.pwc.com/mt Eaquals Training for Excellence, 17 – 18 November 2017, Malta Adjusting to global changes - effects at local level Restricted use Kevin Valenzia – PwC Malta
Disruptive and transformative scenarios How is my How do I What business plan in a capabilities model world of do I need to changing? change? stay relevant? Who are my How are my new customers competitors? changing? 2
The five megatrends Demographic Climate change Shift in global and social Technological Rapid and resource economic power change breakthrough urbanisation scarcity 3
9 facts and predictions about demographic and social change 390 1.15 The average baby born in 2016 will live for 12 weeks million billion longer than one born in 2015 of that increase will be from increase in the world’s those aged 65 or more population by 2030… The world’s 85 richest individuals 400 Half of the own as much wealth today as the poorest schools world’s population growth 3.5 billion between now and 2050 will come from Africa are shut in Japan each year people due to its ageing population 70% of household In 2020 for the There will be a 50% budgets in the G7 are controlled first time the majority of births increase in global mobility by by women that take place in both North 2020 America and Europe will be to a mother aged over 30 PwC 4
We’ll add another 1.15 billion people to the world’s population by 2030, making the total 8.5 billion 97% of this population growth will come from emerging or developing countries World population 1970 – 2050(f ), billions 10 CAGR = 0.7% Forecast Billions CAGR = 1.0% 8 Least developed countries CAGR = 1.3% 6 CAGR = 1.8% Less developed countries 4 India 2 China More developed countries 0 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: UN Population Division, World Population Prospects 2015 July 16 PwC 5
At the same time, we are living longer and having fewer children… The average baby born in 2016 will live for 12 weeks longer than a baby born in 2015 World average life expectancy at birth World birth and death rates per 1,000 people Crude Birth Rate Crude Death Rate 78 Forecast 80 75 71 35 Forecast 70 65 59 30 CAGR = -1.2% 60 25 50 20 CAGR = -0.8% 40 15 30 CAGR = -1.1% CAGR = 0.5% 10 20 10 5 0 0 0 1975 1995 2015 2035 2055 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: UN Population Division, World Population Prospects 2015 PwC 6
…making the fastest growing population segment the over 65s There will be 390 million more over 65s in 2030 than there were in 2015 Africa – change in population by age 2015 – 2030 Asia – change in population by age 2015 – 2030 75% 67% 49% -3% 29% 11% 0-14 15-64 65+ 0-14 15-64 65+ Europe – change in population by age 2015 – 2030 America – change in population by age 2015 – 2030 30% 67% -4% -3% 10% -8% 0-14 15-64 65+ 0-14 15-64 65+ Source: UN Population Division, World Population Prospects 2015 PwC 7
Median ages will also diverge: Japan’s median age will reach 53 by 2050, while Nigeria’s will be 23 Median ages 2015 and 2050 30 40 42 46 38 42 Asia Europe North America 19 25 Africa 29 41 Latin America 33 37 Oceania Source: UN Population Division, World Population Prospects 2015 PwC 8
But the pace of change will vary immensely across different regions and countries… Africa’s population will double by 2050, while Europe’s will shrink… Population change 2015 – 2050 -4% 21% Europe 20% North America Asia 109% 24% Africa 44% Latin America Oceania Source: UN Population Division, World Population Prospects 2015. PwC 9
Europe’s population will contract because death rates will rise significantly above birth rates. In Asia and Latin America birth rates will stay above death rates until around 2050 Europe crude birth vs. death rates (per 1,000) Asia crude birth vs. death rates (per 1,000) 20 40 Forecast Forecast 15 30 +6 +24 -4 per 1,000 10 per 1,000 20 per 1,000 +2 5 10 per 1,000 0 0 1970 1980 1990 2000 2010 2020 2030 2040 2050 1970 1980 1990 2000 2010 2020 2030 2040 2050 Death rate Birth rate Death rate Birth rate Latin America crude birth vs. death rates (per 1,000) Africa crude birth vs. death rates (per 1,000) 40 50 Forecast Forecast +27 40 30 +26 30 per 1,000 20 +17 20 per 1,000 +2 10 per 1,000 10 per 1,000 0 0 1970 1980 1990 2000 2010 2020 2030 2040 2050 1970 1980 1990 2000 2010 2020 2030 2040 2050 Death rate Birth rate Death rate Birth rate Source: UN Population Division, World Population Prospects 2015. Note: Crude birth rate is defined as the number of live births occurring in a population during a given period of time, per 1,000 mid-year total population of the given geographical area during the same period. PwC
Some of the biggest consumer markets today will be overtaken by countries with booming populations Nigeria’s population will exceed the US’ by 2050, while the ‘100 million’ club will include six new entrants – how well positioned is your brand in these countries? Countries with populations greater than 100 million 2015 2030 2050 Source: UN Population Division, World Population Prospects 2015. Note: 2010 countries are (down and right): Nigeria, Russia, India, China, Japan, Indonesia, US, Pakistan, Philippines, Mexico, Bangladesh, Brazil. 2025 countries are: Vietnam, Egypt, the Democratic Republic of Congo and Ethiopia. 2050 countries are: Tanzania and Uganda PwC 11
All countries will need to implement bold policies to cope with these demographic changes… While ageing will be ubiquitous, old-age dependency will rise most significantly in Asia, Latin America and Europe. Today, Asia has 9 working age people to support each elderly person – by 2050, there will be just 4… 2015 2050 2015 2050 Africa Asia 65+ population 2015 Working age population (15-64) 2015 2050 2050 2015 2050 Latin America Europe Working age population (15-64) Source: UN Population Division, World Population Prospects 2015 PwC 12
9 facts and predictions about rapid urbanisation 60,000 1.5 Half of global million people added to the Chinese GDP is generated by the 300 urban population every day largest metropolitan areas. people are added to the global urban population – every week $8tr in infrastructure $16bn the The number of people living in urban slums since 1990 has increased by spending will be needed in New a third expected cost to develop the York, Beijing, Shanghai and desert city of Masdar in the London over next 10 years. UAE 2/3 of New York City’s Income inequality in the 50 biggest cities in the US is By 2025, there could be rooftops are suitable for solar 20% higher than the nearly 40 cities with panels, which could generate population of half of the city’s 10+m US average peak demand for electricity. Sources: PwC analysis of multiple sources (see storyboard to follow). PwC 13
9 facts and predictions about climate change and resource scarcity Only around 3% of all The global population is expected 53 years’ supply left of to demand 35% more water in the world is fresh water, proven oil reserves assuming and three quarters of this is locked food by 2030 current levels of demand continue in glaciers (based on R/P ratios*) A fifth of Average temperatures are 6% annual reduction predicted to increase by over 2°C in the 21 st worldwide energy in carbon intensity is required to consumption could be saved meet the 2 o C target, well above through energy efficiency century, a threshold beyond historic trends measures which scientists believe significant changes to the environment will occur The global population is There is almost 3 times as much It takes 7 units predicted to demand 50% more carbon in known coal, oil and gas of fossil fuel energy to produce reserves than scientific evidence one unit of food energy suggests that the climate will be energy by 2030 able to bear without temperature increases going beyond 2°C by 2100 PwC 14
9 facts and predictions about technological breakthroughs 177 min Seven times 90% of the data average US smartphone or more connected devices than that exists today was created in tablet user spends using their people by 2020 the last two years devices a day Almost 7,000 Around half of By 2020 digital natives houses could be powered US jobs are at risk of being will be the majority population segment everyday with just the energy computerised over the next in the UK burned by active users of the two decades Nike + app If Facebook was a country, it would 76 years Only 0.5% of data is be the most populous in the currently analysed Is the time it took the TV to reach half of US households; world the smartphone did it in less than 10 Sources: PwC analysis of multiple sources (see storyboard to follow) PwC 15
Power of digital Technological breakthroughs Understanding the 4 pillars to realise PwC’s perspective on Appendix Summary reshaping the economy digital potential the digital potential the next digital wave The ‘sharing economy’ uses digital platforms to allow customers to have access to, rather than ownership of, tangible and intangible assets. Sources: PwC Analysis PwC 16
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