Geopolitical Shocks and Climate Change Will Remain Biggest Risks in 2025, Says EIU Report

"Hopes that the world will one day return to normal have been continually dashed since the covid-19 pandemic, and 2025 will be no different," the Economist Intelligence Unit (EIU) says in its Industry outlook 2025 report that explores the challenges, opportunities and trends to watch in the following six industries: energy, financial services, consumer goods and retailing, technology, automotive, and healthcare. The report further says: "Although working and travel patterns are normalizing, the economic and political outlook remains uncertain. EIU forecasts that real GDP will grow by a subdued 2.6% in 2025, similar to 2024 but slower than the average for the ten years before the pandemic." What is more, "The US economy will slow as labor markets tighten, but China's will accelerate slightly, amid stimulus and reviving trade. Those of the EU and Japan will also tick up, but only smaller developing markets such as India will deliver significant growth."

Geopolitical tensions and trade barriers will force more shifts in supply chains, amid subdued business growth. The EIU also presents the following predictions for 2025:

• Inflation is expected to ease, allowing for further monetary easing.
• Prices for agricultural and energy commodities will fall, but those for industrial raw materials will rise.
• Geopolitical risks will persist amid wars in Ukraine and the Middle East, while rising trade barriers between the EU, the US and China will reshape supply chains.
• Climate change will increase geopolitical tensions. National climate pledges will be updated at COP30 in November 2025, but much will depend on US leadership.
• Investment in technology, especially artificial intelligence (AI), will remain strong, but tech companies will face regulatory pressures, investor impatience and scrutiny over energy usage.

According to the EIU, "Falling inflation will allow monetary easing to continue. We expect the Federal Reserve (Fed, the US central bank) to cut interest rates by a further 50 basis points during 2025. We also expect prices for agricultural commodities and industrial raw materials to move in different directions in 2025- 26. Although agricultural prices will continue to trend downwards, prices for industrial raw materials will rise again, particularly for base metals that benefit from the green transition. As for energy commodities, prices will fall on average, but remain at risk from political shocks."

The UK-based company provides the following key global forecasts for each sector covered by its report:

• Energy: Fossil-fuel markets will continue to face geopolitical risks amid conflicts in the Middle East and Ukraine, but investment into renewables will remain strong, particularly in China.
• Financial services: Falling interest rates will weigh on bank profit margins, leading to lower dividend payouts, but the Basel III endgame will be eased or delayed further.
• Consumer goods and retailing: Global retail volumes will expand by 2.2%, helped by disinflation, but regulations around online retailing will tighten further, particularly for high-volume low-price Asian retailers such as Shein and Temu.
• Technology: More countries will start using satellite internet, but use cases will be limited to enterprise clients—military and maritime. Amazon's Kuiper will disrupt the market duopoly of Starlink and EutelSat OneWeb.
• Automotive: After a difficult few years, annual new-vehicle sales will reach a record 97.2m units in 2025. We forecast that sales of new cars will rise by 2%, commercial vehicles by 4% and electric vehicles by 16%.
• Healthcare: Global healthcare spending will outpace inflation, growing by 1.9% in real terms. The World Health Organization will make climate change the focus of its 14th four-year general program, which starts in 2025.

Companies and investors alike should take note that geopolitical shocks and climate change will remain the biggest risks in 2025. The EIU's "baseline forecast assumes that another large-scale war will not break out in Asia or the Middle East. However, the continued threat of geopolitical conflict, in addition to the continuing war in Ukraine, will lead to economic reconfiguration and policy divergence." Moreover, "The EU and the US are already raising barriers against Chinese exports in areas from  automotive and technology to healthcare. Chinese retaliation is likely to intensify in 2025 as rival blocs emerge across the world. These trends," according to the report's authors, "will reshape supply chains over 2025, and could upend our forecast of falling commodity prices and inflation."

Regarding climate change and how efforts to mitigate it will play in these political rifts, the report notes that "At COP30 in November 2025 governments are due to update their national climate pledges (NDCs), but much will depend on US leadership. The debate over environmental, social and governance (ESG) reporting will intensify as regulations enforcing disclosure come into effect in the EU and elsewhere." In addition, "EU climate regulations, due to come into force from 2026, will also have an international impact on trade by forcing multinational companies to monitor their supply chains."

While investment in technology, particularly AI, will be strong as projects gather pace, "technology companies will face pressure from several directions as regulations tighten (particularly in Europe), investors become more impatient for profits and their energy usage comes under more scrutiny." I agree with the EIU that "Companies will need to navigate these new requirements, while also trying to reconfigure their supply chains and seek out areas of growth."

What challenges, opportunities and trends are you watching as we celebrate the beginning of 2025?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Growth Prospects, Risks and Trends in Six Critical Sectors in 2024

The past few years have been turbulent for most companies as the pandemic, soaring commodity prices, high interest rates and political disruption resulted in profits for many and bankruptcy for some. A report published by the Economist Intelligence Unit (EIU) asks: Will conditions stabilize in 2024?

EIU's report provides growth prospects, risks and trends facing six critical sectors in the coming year, as inflation eases but geopolitical tensions remain high. The report argues that the biggest challenge facing businesses next year will be climate change and looks at how experimentation with artificial intelligence will give way to rapid adoption, changing corporate strategies and the nature of work.

Key findings include:

• Climate change will drive demand in sectors relating to mitigation and adaptation. Insurers, companies and governments will struggle to price in the increasing risks.
• EU and US regulations on environmental, social and governance (ESG) reporting will push companies to scrutinize their operations and supply chains. However, skepticism about ESG will harden in the US ahead of November’s presidential elections.
• Corporate concerns over taxation will increase as the OECD introduces its global minimum tax rate and individual governments try to reduce budget deficits and national debt levels.
• Geopolitical tensions and wars will complicate government and corporate responses to all of the above. Investment in supply chains, particularly for technology and the energy transition, will adapt to minimize political risk.
• Generative artificial intelligence will disrupt a few sectors, but most companies will find ways to use AI to increase productivity.

The report also provides key global forecasts for each sector covered:

• Automotive: The automotive industry will face another subdued year in 2024, weighed down by slow consumer spending, high interest rates and disruption to supply chains due to geopolitical tensions. The only bright spot will be the electric vehicles market, with sales expected to soar by 21% to 14.9 million unit as governments and consumers try to mitigate the worsening effects of climate change. The report notes that established carmakers will have to fight hard to hold off competition from China.
• Consumer goods and retail: A slowdown in inflation will bolster retail volume growth by 6.7% in US dollar terms and 2% in volume terms in 2024. However, reduced savings and high food prices, worsened by the effects of climate change, will act as dampeners. The EIU also points out that high food prices will continue to cause problems in Asia.
• Energy: Global energy consumption will grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy will rise by 11%.
• Finance: High interest rates will determine the success or failure of almost every part of the financial services sector in 2024. Though painful for borrowers, banks will enjoy strong net interest margins margins and revenue flows until margins begin to narrow mildly in late 2024. Property firms and funds, however, will suffer.
• Healthcare: Healthcare spending will rise by 2% in real US-dollar terms, following two years of decline, as inflation eases. However, resources will remain constrained as governments try to bring down fiscal deficits and public debt levels.
• Telecoms and technology: Geopolitics will continue to affect technology in 2024. The tech battle between the US and China will persist in areas including artificial intelligence (AI), chips and quantum technologies. AI will continue to develop, particularly generative AI, but will encounter challenges from new regulations in the EU and other major jurisdictions, as well as complications from US-China tensions.

I appreciate how the annual industry outlook provides businesses with foresight of the critical global trends and threats that will affect their sector 2024. Which trends and threats are you watching in the coming year?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Challenges, Opportunities and Trends to Watch in Seven Sectors in 2023

"The continuing pandemic, the war in Ukraine and high inflation have forced many companies to scale back their forecasts" in 2022, the Economist Intelligence Unit (EIU) notes. Will 2023 will be any better?

The 12th edition of the EIU's annual report forecasts growth and key risks in seven business sectors for 2023, as the war in Ukraine pushes up commodity prices and the cost of living. The report argues that the war has disrupted the recovery from the covid-19 pandemic, and businesses now face increased risks as economies slow or tip into recession, particularly in Europe.

The EIU's report also provides key global forecasts for each of the seven industries:

• Global sales of new vehicles will be flat in 2023, but sales of electric vehicles will rise by 25% to 10.7m units.
• In 2023 retail growth volumes will be respectable at 4.9% in US-dollar terms, which will mainly reflect high inflation. In real terms, global sales will slow or fall in most markets.
• Global energy consumption will rise by just 1.3% as the global economy slows. The energy crisis will force some countries to increase their use of coal or rethink plans to phase out nuclear power.
• Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers. Formerly fast-growing fintech companies will be hit by the capital-market crunch.
• Global healthcare spending will rise by 4.9% year on year in US-dollar terms, which will mask falling investment in real terms, as countries struggle to cope with continued demand.
• The metaverse will not become a mass-market in 2023, but this will not stop heavy investment into this technology. The drive to standardization and the battle with web3 will be at the forefront.
• International tourism arrivals will rise by 30% as China slowly loosens its covid-19 restrictions. This will follow 60% growth in 2022, but will still leave total arrivals below 2019 levels.

The EIU also presents the following key forecasts for each industry:

Automotive outlook 2023: Bright spots amid stalling growth

• 
  The automotive industry will remain vulnerable to global headwinds in 2023 including the energy crisis, slower global demand and continued supply-chain problems.
• Global new-vehicles sales will remain flat in 2023: new-car sales will rise by 0.9% and new commercial vehicle (CV) sales will fall by 1.3%.
• Sales of electric vehicles (EVs) will be the only bright spot, growing by 25%, but governments will restructure their incentive schemes.
• Governments' focus will turn to charging networks, which are inadequate to meet the expanding EV fleet.
• Autonomous vehicles will take a leap forward, as UN regulators lift their speed limit.

Consumer goods and retail outlook 2023: Retailers respond to pricing pressures

• 
  Inflation will push up global retail sales by a robust 5% in US-dollar terms in 2023, but the lower volume of sales and surging costs will weaken retailers' profits.
• The rollout of automation technologies will offer opportunities to limit wage growth, which means that retail employment is unlikely to return to 2019 levels.
• Online sales growth will slow, but the online share of retail will edge up to about 14% of global retail sales.
• Inflation-wary consumers will prefer to shop at discount stores, helping these retailers to increase their market shares.
• The economic slowdown in China, caused in part by its zero-covid strategy, will mean fresh challenges for global luxury brands already affected by the loss of Chinese tourists.

Energy outlook 2023: Surviving the energy crisis

• 
  Global energy consumption will grow by only 1.3% in 2023 amid a slowing economy.
• Despite decarbonization targets, coal consumption will grow marginally to compensate for gaps in gas supplies.
• More extreme weather events will force many countries to fall back on fossil fuels, delaying the energy transition.
• Renewable energy consumption will surge by about 11%, with Asia leading the way, but investment will weaken.
• The energy crisis will prompt some governments to backtrack on efforts to phase out the use of nuclear power.

Finance outlook 2023: A new test for financial stability

• 
  Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers in 2023 than in the past two years.
• The impact will be particularly acute in North America and Europe, where governments will offer support. The environment will be tough in Asia as well, although policy rates will rise by less.
• Heavily indebted developing countries will find it harder to refinance foreign debt, driving some to default or require rescues to avoid it. However, the International Monetary Fund will continue its lenient treatment of economies requiring its financing programs.
• The current capital-market crunch will hobble a wide variety of loss-making fintech challengers that sought to outflank incumbents in banking, payments and other activities.

Healthcare outlook 2023: The aftermath of the pandemic

• 
  Healthcare spending will fall in 2023 in real terms, given high inflation and slow economic growth, forcing difficult decisions on how to provide care.
• Digitalization of the healthcare system will continue, but the use of health data will come under stricter regulation in the US, Europe and China.
• Patent cliffs for key drugs and measures to control pharmaceutical pricing in the US, India and elsewhere will force some major pharma companies to spur growth through deals.
• Supply-chain disruptions will continue to push up drugmakers' costs, despite investment in more localized pharmaceutical production.

Technology and telecoms outlook 2023: The battle for digital supremacy

• 
  The metaverse will not become mass-market in 2023, but this will not stop heavy investment in the technology. The drive to standardization and the battle with web3 will be at the forefront.
• Artificial intelligence (AI) will continue to develop, after several breakthroughs in 2022, but will encounter challenges from new regulations in key jurisdictions.
• Semiconductors will continue to be a geopolitical tool between the US and China, involving many other countries. Some companies producing the most advanced products and equipment will benefit.
• Asian telecommunications companies will continue to look for consolidation in 2023. Mobile markets with four or more mobile network operators, such as Sri Lanka, Japan and India, are the most likely to secure deals.

Tourism outlook 2023: Turbulence in the travel industry

• 
  Global tourism arrivals will rise by 30% in 2023, following 60% growth in 2022, but they will still not return to pre-pandemic levels.
• The economic downturn, sanctions on Russia and, above all, China’s zero-covid strategy will be among the factors weighing on the industry.
• Hotels, restaurants and airports will struggle to cope with labor shortages, wage demands, and high food and energy prices.
• Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand.
• The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

Useful for companies developing their global business strategy for the coming year, the report presents the following macroeconomic key points:

• The war in Ukraine, combined with lockdowns in China, has exacerbated supply-chain disruptions and pushed up global inflation, forcing EIU to downgrade its forecasts for economic growth in 2023.
• Many governments, particularly in Europe, will be forced to scale back investment in public services, including healthcare, in order to protect households and businesses from the effects of higher prices.
• While some businesses (particularly in commodities sectors) will benefit from high prices, many will be hit by weak demand and high input costs, particularly for energy.
• Profitability will be squeezed, while corporate investment will slow amid rising interest rates.
• However, some companies (notably in pharmaceuticals, technology and retailing) will take advantage of lower stock-market valuations, bankruptcies and government incentives to snap up strategic assets and position themselves for an eventual upturn.

"Amid all this gloom," the EIU encouragingly says "there will be areas of opportunity." Taking the EV market as an example, "online retail sales and tourism will continue to deliver strong growth, particularly in Asia and the Middle East," the report notes. "Innovations—from the metaverse to automated vehicles and data analytics (notably in healthcare)—will attract investment, with some companies also seizing on chances offered by volatile financial markets." I concur that "It will not be an easy year, but it could be a transformative one."

Lastly, The Economist produced a video that looks into which stories may be worth watching in the coming year.

What will you be watching in 2023?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

2022 Will (Hopefully) Be a Year of Recovery and Renewal for Economies and Businesses Affected by Covid-19

"2021 was supposed to be a year of recovery for economies and businesses that had been affected by the coronavirus (Covid-19) pandemic," according to The Economist Intelligence Unit's annual report that examines the opportunities and challenges ahead for seven sectors of the global economy: automotive; consumer goods and retailing; energy; financial services; healthcare and pharmaceuticals; technology and telecoms; and tourism. "However, it has not been a straightforward rebound. Although coronavirus vaccines allowed many countries to ease lockdowns and begin a recovery, cases remained stubbornly high, albeit with an improved recovery rate. International borders remained either shut or subject to cumbersome testing requirements. One knock-on effect was supply-chain disruptions that hampered companies' ability to meet consumer demand, pushing up prices. Many of these problems will persist into 2022."

Businesses operating in these seven sectors should note that "[g]rowth prospects for all these sectors in 2022 will depend on their respective base levels. Some sectors—notably, telecoms and pharmaceuticals—thrived during the pandemic, but will need to navigate evolving consumer demands, as well as increased competition and regulation going forwards. Some sectors—notably, automotive and tourism—suffered slumps and will struggle to deal with the aftermath. For the remainder, the situation and outlook remain mixed, with companies pushing against headwinds to reach areas of opportunity."

The report presents the following key forecasts:

• Supply-chain disruption will make it harder for manufacturers and retailers to meet recovering demand, dampening sales forecasts for both consumer goods and automotive.
• High prices will push up interest rates, which could raise bad debt levels and dampen demand. However, some consumer companies and banks will turn higher prices to their advantage.
• New technologies - both digital and non-digital - will offer new opportunities, but will also attract more attention from regulators keen to ensure a level playing field. Health apps will be among those affected.
• Companies will need to prepare for changes in tax regulation, following a global deal to set a minimum corporate tax rate. Although this legislation may be derailed, efforts to collect taxes are increasing.
• Amid efforts to combat climate change, companies will come under more pressure to cut emissions and meet more standardized reporting requirements. This will affect their investment strategies, particularly in the oil and coal sectors.

In addition, below are the key forecasts as they relate to each of the aforementioned seven sectors of the global economy:

Automotive in 2022: back to near-normal

• Global sales of new vehicles will rise by 7.5% in 2022, taking them back past 2019 levels. The recovery will be led by Asia and North America.
• Many vehicle makers will still struggle to meet recovering demand amid continuing supply-chain disruptions.
• Global sales of new electric vehicles (EVs) will continue to soar, rising by 51%. New emissions rules will force carmakers to make far-reaching decisions about their fossil-fuel models.

Consumer goods in 2022: knots in the supply chain

• Global retail sales will recover to 2019 levels in volume terms, but coronavirus (Covid-19) cases, inflationary pressures and slow job growth will pose challenges.
• Online shopping will grow at a slower pace in 2022 as lockdowns lift, but will still account for 17% of global retail sales.
• Higher supply-chain costs will motivate businesses to wean consumers off discount schemes and focus on higher-margin premium products.

Energy in 2022: transition time

• Global energy consumption will rise by 2.2% as economies recover from the impact of the pandemic. All types of energy, apart from nuclear power, will benefit.
• Energy prices will stay firmer than in recent years, as demand recovers and supply bottlenecks continue to disrupt power generation.
• Many energy companies will need to undertake an urgent review of their strategies in 2022, as governments and investors ramp up pressure to cut emissions.

Finance in 2022: gusty tailwinds

• Economic recovery and rising interest rates will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels.
• Developing markets will take longer to regain their appeal than developed ones. Regulatory uncertainties in China will throw up challenges in the world’s fastest-growing market for financial services.
• Green finance will move towards center stage, as companies and investors try to live up to pledges made at the COP26 climate summit.

Healthcare in 2022: the aftermath of coronavirus

• Global healthcare spending growth will slow to 4.1%, despite rising costs, as governments start to assess the economic damage wreaked by the pandemic.
• Vaccinating the world against Covid-19 (coronavirus) will remain a core priority. However, healthcare systems will also need to start tackling a backlog of non-coronavirus care.
• Healthcare is not exempt from supply-chain problems, and governments will push ahead with regulation designed to increase resilience and lower costs.

Technology and telecoms in 2022: geopolitical tensions

• Of 60 major telecoms markets, 16 will launch 5G services in 2022 (see map below), but challenges in spectrum availability and pricing will cause delays.
• Technology and politics will continue to be interlinked. The semiconductor shortage will persist, making onshoring of chip production a strategic priority for countries.
• Governments will tighten regulations to boost cyber security, which will be the main short-term risk to digitalization progress, but discrepancies between countries will often dilute the impact.

Tourism in 2022: a shaky recovery

• International arrivals will recover some ground but fail to return to 2019 levels, with business travel likely to remain depressed.
• Differing levels of border control and variations in vaccine passports will continue to make international travel difficult in 2022, although domestic tourism will fill some gaps.
• Compliance with climate-change regulations, as well as higher fuel prices and wages, will increase air-travel costs in 2022. This will eventually lead to airline mergers, airport closures and higher ticket prices.

Lastly, with respect to its macroeconomic forecast, The EIU asserts that "the global economic recovery will continue in 2022, with real GDP expanding by 4.1% at market exchange rates, after rebounding by an estimated 5.4% in 2021. Of the G20 countries, China and Turkey were the only two not to shrink in 2020 and will continue to post firm growth. Eight more, led by the US, have already regained their 2019 GDP levels in real terms, following a strong rebound. The remaining ten, including EU countries and Japan, will regain pre-pandemic levels in 2022, having lost two years of growth."

The report, however, points out that the "recovery could still be derailed if the pandemic flares up again. Persistent supply-chain disruptions could keep commodity prices elevated. This will benefit commodity-dependent countries, but will fuel inflation. That, in turn, will lead to tightening monetary policy, with impacts on stock markets, banks, companies and governments. Geopolitics will remain fraught too: the EIU sees an escalation in US-China tensions as the biggest global risk."

Twelve months ago as my colleagues and prepared to close-out 2020, we anticipated 2021 would be a year of recovery and renewal. While some sectors such as technology and pharmaceuticals have seen a healthy rebound, the automotive and tourism sectors struggled during the past year. And the consumer goods, energy, finance, and healthcare sectors had a mixed year as they seek out new areas of opportunity. In the coming year, we will be watching the global vaccination rate, the rise of any potential variants of covid-19, and how governments respond to new outbreaks. We will also monitor how governments and central banks continue their efforts to stimulate economic growth while curtailing inflationary pressure.

What will you be watching in 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Recommendations on What Private Investors Should Look for and What Governments Should Do to Attract Investment in 5G

In reading the previous post, which is about a report that looks into how mobile and digital technology, including IoT, LTE and 5G, can support industry decarbonization, a client of my consultancy, Global Tactics, sent me an email asking whether or not countries are ready for 5G. While people globally have been touting the benefits of 5G for the past few years, his observation as a chief executive of a multinational IT services and hardware company is that some countries are more ready than others. I appreciate the question as I recently read The Economist Intelligence Unit's (The EIU) report entitled The 5G Readiness Guide: Deployment strategies, opportunities and challenges across the globe.

In providing background on the report, The EIU says it "collected data and information on the 5G environment in the top 60 telecoms markets worldwide, in order to score them on six key metrics: the business environment, spectrum availability, the current level of 5G deployment, 5G network speed, progress on industry trials of 5G and the robustness of 5G policy." The paper also contains a snapshot of The EIU's scores for each region.

The EIU importantly explains that its "assessment is intended to help companies planning to invest in the 5G ecosystem to understand where each country stands in the 5G race, as well as its future potential. It also allows policymakers to benchmark their 5G regulations and policies against those of other countries, and make improvements that could attract more investment into the sector."

Below are the reports key findings:

• An early start in 5G preparation, along with better management of the coronavirus (Covid-19) pandemic in 2020, has helped many Asian countries to free up spectrum in the higher bands in order to forge ahead on 5G rollouts.
• Gulf countries are also among the most 5G-ready globally and offer significant market opportunities for providers of next-generation technologies.
• Despite lagging in spectrum auctions, Western European countries are at the forefront of testing and rolling out 5G-based industrial applications.
• Inadequate spectrum policy and a lack of regulatory coordination have held back 5G development in the US, but progress is being made under the Biden administration.
• Most countries in Africa and Latin America are likely to remain focused on expanding 4G and fiber broadband in the medium term, given a lack of funding and the low capacity to monetize 5G.
• A 5G-specific policy that covers auctions, deployment targets and trials, coupled with government support in the form of tax incentives or low-cost loans, is the best way to support faster rollouts.
• The US-China dispute over Huawei and other Chinese telecoms equipment manufacturers poses the biggest risk to 5G rollout across all regions, second only to disruption caused by Covid-19.

The EIU also presents the following recommendations bifurcated by what private investors should look for and what governments should do to attract investment.

What private investors should look for:

• Countries with a national 5G policy that covers auctions, deployments and industrial trials.
• Governments that enable collaboration between operators, vendors and industry players.
• Countries with a high mobile-service penetration rate and a high average revenue per user, where 5G smartphone shipments are on the rise.
• Industrial economies where businesses are keen to adopt 5G technology.

What governments should do to attract investment:

• Ensure availability of contiguous blocks of spectrum and equitable distribution to all operators.
• Consult industry players on spectrum base-price prior to auction, in order to avoid delays.
• Offer single-window clearance for telecommunications licenses and a medium-term national 5G policy.
• Offer incentives to encourage infrastructure and spectrum-sharing among operators that can reduce investment costs.
• Partner with vendors and the industry to facilitate industrial trials.
• Make 5G spectrum directly available to enterprise users, such as manufacturers, who want to deploy a private 5G network.
• Explore opportunities for public-private partnerships (PPPs).

The EIU correctly notes that while the global rollout of 5G has been affected by the pandemic, "The coronavirus has, nevertheless, accelerated digitalization and opened up new opportunities for telecoms operators. Fast, reliable connections have become vital to businesses, consumers and governments as they try to cope with this global crisis."

The reports adds that "For companies, the pandemic has underlined the benefits of deploying online offerings, automation and developing the Internet of Things (IoT) to manage supply chains. For consumers, it has increased demand for online goods and services. And, for governments, it has highlighted the importance of deploying online services, including healthcare, as well as the potential benefits of advanced data analytics, artificial intelligence (AI) and robotics."

I support The EIU's assertion that "5G will be the launchpad for countless new applications, from self-driving cars and smart cities to augmented reality (AR)." What is more, "5G networks will offer benefits in the form of hyperfast connections, improved reliability, high capacity and low latency (meaning faster response times for requests). For telecoms operators, the upgrade represents an opportunity to move beyond communication services to offer hi-tech solutions to businesses. Businesses can use these technologies to transform their operations and optimize efficiency, while governments can create a robust 5G infrastructure to attract investment, create jobs and drive economic growth."

The report adds that while the "benefits of 5G are significant ... so is the investment necessary for its rollout." Moreover, "As operators and governments decide which markets will offer the best returns on 5G, there are several factors to consider. Strong and affordable infrastructure (with the right spectrum and good coverage of base stations) will be the foundation, but operators will also need to find the right 5G products and service applications to sell. Finally, the business environment will need to support significant research and development (R&D), so that 5G capabilities are developed and used in the most efficient way." As reflected in the map above, "The weighting of these factors differs markedly by region."

Do you agree with The EIU's recommendations on what private investors should look for and what governments should do to attract investment? If 5G is deployed in industrialized countries at a faster rate than emerging markets, how can governments, nongovernmental organizations, and the private sector prevent a digital divide forming which will result in a gulf between those who have access to the internet and those who do not?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

China Will Seek to Enhance Relations with Africa in 2021 and Beyond, Says EIU Report

In a report that explores the evolving relationship between Africa and China, The Economist Intelligence Unit says relations between the two "have been tested by the impact of the Covid-19 pandemic that spread across the continent in 2020. Disruption to national and international travel, trade and investment caused a synchronized downturn in all but a few economies in Africa. However, the Chinese government and some Chinese companies are making shrewd moves to build goodwill in the region, protect their strategic interests and set the foundation for stronger commercial engagement in the years ahead."

Titled Taming the dragon: new frontiers of co-operation, below are the report's key findings:

• China will seek to enhance relations with Africa in 2021 and beyond, with a fresh focus on agriculture, environmental issues, the digital economy, healthcare provision, industrial capacity, regional connectivity and free trade and national security;
• The Belt and Road Initiative (BRI) will continue to drive international connectivity with major developments in the pipeline to enhance trade facilitating infrastructure;
• Enhancing food security is high up the list of policy priorities in both Africa and China. Engagement in African agricultural ventures increasingly characterized by corporate mergers, acquisitions and joint ventures involving private companies;
• Digital expansion will be boosted by the completion of a cross-border fiber-optic cable in Pakistan, forming the backbone of China's Digital Silk Road; and
• China will seek to engage in more bilateral and collective free-trade deals, presenting the potential starting point for more in-depth trade and investment ties.

"China has worked hard to establish a solid footprint across Africa through years of high-level political engagement and the provision of access to much-needed project finance and expertise," the report explains. "Chinese companies have delivered thousands of transport, power and telecommunications projects in Africa over the past two decades. China has also supported export-oriented industrial park developments and taken a dominant position in many African markets for products such as competitively priced consumer goods, building materials, plants and machinery, and electronic equipment."

Impressively, "The value of Chinese construction contracts in Africa has topped US$40bn every year since 2011 (surpassing US$50bn in 2014-17), and for years the number of Chinese workers in Africa has been close to 200,000 (although this slipped from a high of 264,000 at the end of 2015 to 183,000 at the end of 2019), according to the National Bureau of Statistics of China." The EIU further says that "[t]his level of expatriate staffing reflects extensive Chinese engagement in Africa—expertise that is required, given the scale and complexity of some Chinese ventures in Africa, employment conditions attached to Chinese loans and foreign direct investment (FDI), and loose expatriate employment regulations across much of Africa. Interestingly, recent leading information revealed that both Chinese and local firms operating in the construction and manufacturing sectors in Angola and Ethiopia tended to employ just as many Chinese workers as local ones, paid them similar amounts and trained them to similar standards."

"China is the region's single largest bilateral trader and provider of foreign capital in the form of commercial loans and FDI," the report notes. "Over the past two decades loans and FDI have been directed towards transport, power, extractives and telecoms projects, as have smaller but increasing amounts to manufacturing, finance, business services, and health and education." Furthermore, "Resource-rich countries, including Angola, Algeria, Democratic Republic of Congo (DRC), Egypt, Nigeria, South Africa and Zambia, have been major beneficiaries. Countries on the eastern seaboard, including Djibouti, Ethiopia, Kenya and Tanzania, have received finance for major industrial and transport-sector projects. The financial splurge looks likely to continue, although financial forays may be more selective and even more diverse in the years ahead, given Chinese financial exposure to some parts of Africa coupled with China's own evolving strategy and needs."

"An interesting feature of China's financial engagement in Africa is the primacy of loans extended to the region over FDI flows," according to The EIU. "This could suggest that Chinese companies have tended to be more risk averse when it comes to Africa and may have attempted to minimize operational risks linked to political and regulatory issues. However," as indicated in the chart above, "the gap appears to have narrowed in recent years, possibly suggesting that China has become more confident about a more hands-on and exposed approach to its engagement. Whether this is true—or will last, given the impact of Covid-19 on African financial stability—remains to be seen."

On the topic of free trade and industrial development, "A new feature of Africa's evolving commercial relations with China could well be the emergence of more bilateral and collective free-trade deals. Mauritius became the first African state to launch a bilateral trade deal with China when a free-trade agreement (FTA) between the two countries came into effect in January, marking the first step in a potentially new direction for Sino-African relations in which Mauritius could well act as a catalyst and template for other free-trade deals in Africa. Currently, 13 African countries (Algeria, Tunisia, Egypt, Sudan, Ethiopia, Uganda, Nigeria, Zambia, Zimbabwe, Botswana, South Africa, Seychelles and Mauritius) have bilateral investment treaties with China, which could morph into more comprehensive trade and investment agreements in the years ahead." As illustrated in the image on the left, "China has also developed industrial parks and free-trade zones in a wider range of African countries, as well as an evolving network of special economic zones across Africa, which present the potential starting point for more in-depth trade and investment ties."

"In addition to this," the reports says:

China has expressed support for pan-African and sub-regional free-trade arrangements that seek to build larger markets and more integrated supply chains on the continent For instance, China is supportive of the enormous African Continental Free Trade Area (AfCFTA) agreement, which began its initial implementation phase in January. China considers the AfCFTA and other smaller sub-regional agreements as 'win-win' situations, at least in the short to medium term. These FTAs necessitate infrastructure development and industrial know-how (including more and better highways, railways, seaports and airport infrastructure) and industrial know-how, which are areas where China excels on the continent. However, regional FTAs could create competition for Chinese manufactured products in the longer term. A clearer picture will emerge surrounding the impact on Sino African relations of the AfCFTA and other regional FTAs once rules of origin are better established for the provision of African goods and at what level external tariffs are set for Chinese imports. At present, China does not appear overly concerned and is more eager to exploit the opportunities that Africa's regional FTAs look set to create.

Regarding telecommunications and the Digital Silk Road, The EIU points out that "China dominates the market for smartphones and feature phones (traditional-style push-button mobile phones) in Africa, and this is unlikely to change soon. Chinese companies offer affordable prices and tailored products to African markets that provide a clear competitive edge."

"Transsion and Huawei, together with Xiaomi, Oppo and a few other minor players," as reflected in the chart above, "provide more than two-thirds of registered smartphones and an even larger share of feature phones in Africa. A dominant and expanding handset presence is just one part of China's strategy for the telecoms sector in Africa, which has and will continue to drive the rapid spread of mobile data and voice services across the region."

The report further asserts that "Even more crucial to China's future engagement in the telecoms sector in Africa, and a key pillar of its broader commercial strategy, is control over existing hardware and the rollout of next generation technology. Chinese companies including Huawei, ZTE and China Telecom are major providers of backbone and last-mile technology in Africa with an eye on wider rollout of mobile and fixed-line infrastructure. Huawei may have been excluded from key telecoms infrastructure contracts in North America and Europe, but the company has deep roots in Africa that provide it with a solid and seemingly irreversible foothold to pursue expansion plans in the region."

What is more, "Information and communications technology (ICT) services could receive a boost in 2021, as China will soon lay the final stretch of a cross-border fiber-optic cable in Pakistan that forms the backbone of its Digital Silk Road and will support China's digital expansion across Africa." As illustrated in the image on the left, "The cable will connect to the submarine PEACE cable in the Arabian Sea that links to various entry points in Africa, providing countries participating in the BRI with enhanced access to the Chinese tech sector while reducing reliance on western-developed and controlled cable services. Data centers, smart cities, 4G expansion and possible 5G introduction are on the menu and will help to shape Chinese involvement in telecoms and other business areas across Africa in the years ahead."

The report, however, notes bumps in Sino-African relations lie ahead:

Concerns have escalated over the past twelve months regarding African debt exposure to China the potential loss of sovereignty over strategic assets and resources following failure to make payments. However, China has proved reasonably flexible in postponing and restructuring debt repayments so far in countries such as Angola, Ethiopia, Kenya and Zambia. In the case of Kenya, in January the government secured a six-month debt-repayment holiday worth around US$245m, although China had taken a tough stance; the potential for a debt for asset swap with regards to the Port of Mombasa port looked a real possibility until fairly recently. To date, China has signed debt service suspension agreements with a total of 12 African states and has provided waivers of matured interest-free loans for 15 African states under the G20 Debt Service Suspension Initiative, and more could follow. However, Africa's current financial difficulties are not easily solved, and debt restructuring has largely kicked the problem down the line in the hope that economic conditions improve and financial strains ease. 

My colleagues in Africa concur with The EIU's assertion that "Anti-Chinese sentiment within some African populations is simmering below the surface, with citizens resentful of Chinese economic influence and the lack of higher-value job creation for locals associated with some Chinese investments." The report adds that "[t]here is a perception that ruling elites in Africa are complicit in Chinese predation of national resources and the displacement of African workers and products by Chinese substitutes. Whether or not these feelings are justified, the developments of 2020 increased tensions and elicited a response from China to appease its critics. For instance, the trip to Nigeria [this past January by Wang Yi], the Chinese foreign minister, incorporated efforts to smooth relations that had frayed following reports of Africans being targeted for Covid-19 testing and forced quarantine in Guangzhou, China. These sentiments will be hard to shake off, and further outreach efforts should be expected to help pave the way for future trade and investment."

Business leaders and investors looking at opportunities in Africa may find value of the report's concluding paragraphs:

China is on a new geopolitical and economic drive in Africa, and countries across the region stand to benefit substantially from Chinese interest in the region in terms of industrial and technological development, regional and international connectivity, and global value-chain integration in the years ahead. Currently, Africa remains receptive to Chinese engagement, recognizes the benefits that could accrue, and is actively seeking Chinese economic support, which bodes well for Sino-African relations. However, securing Chinese commitments is not a given, and achieving the best possible deal will require that African governments and companies hone their bargaining skills and fully value what they have to offer.

The direction of travel appears to be setting the foundations for an increasingly busy two-way street between Africa and China. This will undoubtedly throw up challenges for corporations from Africa and those based elsewhere in North America, Europe, the Middle East and other parts of Asia. However, evolving Sino-African relations will create more and new business opportunities that can be exploited by non-Chinese entities. Chinese companies will consolidate their presence in the region but do not have exclusivity to trade-facilitating infrastructure, industrial parks, power-generation sites, IT infrastructure, or consumer markets—whether or not they have helped to build or finance these.

I have witnessed the increased engagement of Chinese businesses in Africa over the past several years. While the FDI is greatly needed, particularly for those African countries possessing an abundance of natural resources, there has been negative outcomes including the use of Chinese workers rather people from local cities and villages, corruption resulting from weak government institutions and opaque contracts with Chinese firms, and unsafe working conditions and environmental degradation. I have also seen a rising number inexpensive goods and crafts manufactured in China dumped in local markets throughout Africa, which makes it difficult for local manufacturers to sell their products.

With respect to the continent's digital economy, many tech services require an operating license granted by a government agency. I have seen local entrepreneurs being denied a license in favor of a competing company from China. A friend from Ethiopia once asked for my opinion about launching a fintech company based in the country's capital of Addis Ababa. While I agreed that there are few companies operating in this sector, I advised him that he should be mindful of Chinese companies deploying similar services in the country and throughout the east Africa region.

These challenges notwithstanding, the African continent possesses as large youthful population and a (slowly) rising middle class looking for more sophisticated consumer products and technology services. What is more, African businesses understand they will need to invest in tech services in order to better compete with their domestic competitors and access export markets oceans away.

Is it a better investment to support a local African company or a larger Chinese corporation that has robust plans for entering the African economy? I see pros and cons for either, but perhaps "both" is the best answer. What do you think?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

While a Slow, Painful Recovery to the Global Economy Is Predicted in 2021, the EIU Says Digitalization Will Present Opportunities for Certain Sectors

While I am always mindful of risks that can impact a company's operations, a pandemic is not often a risk most corporate leaders prepare for. The coronavirus pandemic's grip on the global economy was certainly not in consideration when I published a post about The Economist Intelligence Unit's (The EIU) Industries in 2020 report. One year later, The EIU's report entitled Industries in 2021: A Slow, Painful Recovery, which gives its outlook for six global industries: automotive, consumer goods and retail, energy, financial services, healthcare and pharmaceuticals, and telecommunications, says "[m]uch of what we predicted in last year's report turned out to be wrong. As we all know, the coronavirus (Covid-19) pandemic overturned assumptions about the development of the global economy and destroyed any hope of steady growth for many industries. This year more uncertainties and risks lie ahead as the world stutters into a recovery."

The report explains: "With their finances already weakened by the pandemic and resulting lockdowns, many companies will not be able to take advantage of a recovery that is likely to be fitful. The consumer goods and retail sector in particular is likely to see a wave of bankruptcies and store closures as more business goes online. The financial sector will also have to cope with a sharp rise in non-performing loans that, in some cases, may overwhelm the provisions that banks have put in place. Restructuring will reshape even those industries, such as telecoms, which have emerged from the pandemic relatively unscathed. However, there will be some winners from this process as markets consolidate around surviving companies and opportunities open up for new business models."

What is more, "With many industries lobbying for support, governments whose tax revenues are already depleted will have to focus support and incentives on sectors with the strongest growth prospects, or those that feed into long-term policy goals. These are likely to include protecting jobs, promoting investment (particularly in innovation) and tackling climate change."

Regarding the energy sector, The EIU maintains "policy will focus on increasing the use of renewable energy. Even Poland, previously a staunch defender of its coal sector, will begin a phase-out, while markets in South-East Asia will see particularly strong growth in renewables. In the automotive sector, generous incentives will continue to encourage purchases of electric vehicles, particularly in Europe, although countries such as France will start to trim back funding as the sector develops. China, meanwhile, will shift its focus towards hydrogen fuel cell vehicles, previously an area where Japan led the way."

On the topic of trade spats and international disputes, the report suggests: "As countries and companies try to rebuild, their focus is likely to turn inwards, with domestic markets and operations becoming a priority. However, as pressure to reshore production and secure supply chains increases, this will have implications at an international level, too."

For example, "In the telecoms sector, this has particular implications for Huawei, a Chinese telecoms company that is now being targeted by US export controls. The technology war will also affect other sectors, including automotive and consumer electronics, while in the financial services sector concerns over China's intentions could undermine Hong Kong's role as an international hub. The UK, meanwhile, will face its own international challenges, as Brexit finally takes full effect on January 1st, drastically changing the business environment for financial firms, automakers and many others."

"Digitalization," according to The EIU, "will affect nearly every industry sector. In the consumer goods and retail sector (and even the automotive sector) the growth of online shopping will generate new companies and new jobs, making up for some of the cuts seen in real-world retailing. However, online retailers will not have it all their own way, with cash-strapped governments keen to raise digital taxes that are likely to exacerbate international tensions."

Moreover, "The rise in online shopping and other activity will also fuel the growth of new financial services, starting with digital payments and progressing into digital currencies, including national ones in China and elsewhere. Even healthcare providers, spurred by the pandemic and social distancing measures, are expanding their online services, with new regulations widening access to telehealth—while at the same time reining back its use where it could affect patient care."

The EIU's "key global forecasts for the six industries covered by this report are:

• "Asia will be the first region to rebound to 2019 levels in most industries, given its relatively shallow slump in 2020;
• "Latin America and Africa will see the slowest recovery, held back by low commodity prices and high debt levels;
• "new-car sales will recover to grow by 15% globally, while commercial vehicle sales will rise by 16%, but only China, Ukraine and Turkey will see sales return to their 2019 levels;
• "global retail sales volumes will grow by 3% but still fall 2% short of 2019 levels;
• "energy consumption will rebound partially—by 2.6% worldwide—but demand for oil and coal will remain lower than in 2019 as the use of renewables surges ahead;
• "financial firms will face weak demand for their services amid mounting debt defaults, while their income will be hurt by low interest rates;
• "healthcare expenditure, which dipped in 2020 despite spending on the pandemic, will surpass 2019 levels, rising by 7% worldwide in US dollar terms; and
• "global mobile subscriptions, which also dipped in 2020, will increase by 3%, again surpassing 2019 levels."

The EIU held a webinar, which is available through this link or the video embedded below, features industry analysts who comment on specific aspects of the report. While I recommend watching the session in its entirety, one point worth mentioning is the presentation of how the six industries covered by the report will be impacted by four key trends:

Job loses and bankruptcies will mount

• Automotive
• Consumer goods and retail

Some governments will aim to support a green recovery

• Automotive
• Energy

Trade spats and international disputes will remain disruptive

• Financial services
• Telecoms

Digitalization will offer the biggest opportunities

• Consumer goods and retail
• Financial services
• Healthcare and pharmaceuticals
• Telecoms

"As these decidedly mixed forecasts demonstrate," the report notes "there will be nothing straightforward about the global economic and business recovery in 2021. Even if the coronavirus is brought under control, many companies will face challenges that they will not be able to meet. Nevertheless, there will also be opportunities on offer for companies that are nimble enough to take advantage of rapid changes in the economic, business and political environment."

What are your predictions for 2021?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

2020 Will See a Pick-Up in Global GDP Growth and Global Trade, Despite Continuing Trade Tensions

"After a gloomy year, the world's major industries are looking for an upturn in 2020. However, much will depend on policies in the US," says a report by The Economist Intelligence Unit (The EIU), the research arm of The Economist, in its Industries in 2020 report.

In its Industries in 2019 report, The EIU "highlighted five major risks that could undermine global business during the coming year. Four of those risks came true: the deepening of the US-China trade war, an emerging market downturn, tussles over technology and sanctions on Iran. These all dented economic growth and consumer confidence, dragging down sales across several business sectors during 2019. The fifth risk we mentioned, Brexit, has still not happened, but continues to overshadow business in Europe."

The EIU is "expecting a pick-up in global GDP growth and global trade in 2020, despite continuing trade tensions. However, regional trends will diverge, leading to mixed growth forecasts for the six major business sectors covered in this report: automotive, consumer goods and retailing, energy, financial services, healthcare, and telecoms. While there will be opportunities on offer, there are six factors that will determine the direction of these industries in the coming year:

• "A sporadic recovery. Although the global economy will accelerate, growth will be led by an upturn in non-OECD markets, while OECD markets will remain subdued. However, GDP growth in China will also continue to slow, affecting global demand for many goods and exposing problems with manufacturing overcapacity.
• "A watershed election. The US presidential election in November 2020 will be a turning point for several sectors. The re-election of the Republican president, Donald Trump, would slow the rollout of renewable energy, for example, while a Democrat victory could bring new efforts to reform healthcare, as well as sharp increases in corporate taxes.
• "From trade to regulation. The US-China trade war will broaden to affect markets including the EU and Japan. However, the focus will turn from tariffs to regulation, particularly that of the financial and technology sectors. We expect more US sanctions against Chinese companies, as well as legal skirmishes over intellectual property.
• "Asian alliances. While the US continues to raise trade barriers, Asia is forging ahead with new trade deals. The 16 countries in the proposed Regional Comprehensive Economic Partnership (RCEP) aim to sign an agreement in 2020, creating the world’s biggest free-trade agreement. Meanwhile the 11 countries in the overlapping Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will continue to ratify that deal, while opening negotiations with potential new joiners such as China.
• "Brexit hangover. Even if Brexit happens on January 31st 2020—as currently expected—uncertainty will not disappear. The transition period could be fraught, with short-term disruption to trade flows heightening political wrangling over future trade deals.

What is more, "These factors will affect all six of the industries covered in this report, to varying degrees.

"The automotive sector, which has tumbled in 2019, will benefit somewhat from the recovery in many emerging and developing markets. We see car sales heading into positive territory after dropping in 2019. However, commercial vehicle sales in particular will come under pressure from global trade trends as the US continues to threaten vehicle-producing countries such as Mexico, Germany, Japan, South Korea and China with increased tariffs. Brexit will also bring enormous challenges for Europe's vehicle sector, particularly for UK-based producers.

"Consumer markets will also be badly affected by global trade tensions, particularly in the electronics sector, while the political turmoil in Hong Kong will dent sales of luxury goods. This, combined with retail’s greater reliance on developed markets and the rise of online retailing, will slow global retail sales. We expect retail sales to rise by just 2.2% in volume terms, down from 2.5% in 2019.

"For the energy sector, the pledges made under Paris Climate Change Agreement in 2016 will begin to take effect in 2020, making this the base year against which 2030 targets will be judged. However, with the US on the brink of withdrawing from the agreement, global progress will be slowed. The target of slowing global warming to less than 2 degrees centigrade is looking increasingly unattainable, unless the US election results in an unexpected policy change. The oil sector will also be vulnerable to political shocks, although we expect slow consumption growth to keep prices range-bound.

"The financial services sector will see little uplift from accelerating global growth, because it will be more affected by the slowdown in core OECD markets. The economic weakness of developed markets will keep interest rates low, maintaining the pressure on banking and investment margins. Several major financial hubs, including Hong Kong and London, will also be fragile amid difficult political conditions. However, the expansion of digital banking will hold immense promise for increasing financial inclusion in emerging markets.

"For the healthcare sector, too, the US presidential elections will be a particular watershed. Debates will rage over healthcare reform and drug pricing. With other countries also bearing down on prices but expanding access to healthcare, we expect global health spending to accelerate sharply, while spending on pharmaceuticals slows.

"In the telecoms sector, investment in 5G and fiber fixed-line services is likely to be a top priority in 2020. However, companies will have to invest with little certainty of a return and with regulation still uncertain. Moreover, the US-China trade war will continue to pose a major risk, given the dominance of Chinese companies such as Huawei in the build-out of telecoms infrastructure."

The report adds: "As a result of these trends, our key global forecasts for the six industries covered by this report are:

• new-car sales will recover to grow by 1.7%, but CV sales will edge down by 0.1%;
• retail sale volumes will increase by 2.2%, slower than the 2.5% reported in 2019;
• global energy consumption will rise by 1.8%, with particularly strong growth for renewables, while oil prices will remain range-bound;
• bank balance sheets and lending will expand by 6.5%, with Asia leading the expansion;
• healthcare spending will climb by 6.2% worldwide in US dollar terms, despite growth of just 3.1% for pharmaceuticals; and
• global mobile subscriptions will increase by 3%, fixed lines by nearly 2% and broadband subscriptions by 6%.

"Despite these mixed forecasts, there will be opportunities on offer for companies that are competitive and international enough to take advantage. Even so, they will have to be nimble to adapt to rapid changes in the business and political environment."

Lastly, The Economist produced a video presenting its predictions for the top stories of 2020.

What are your predictions for 2020?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Political Risk Will Hang Heavily Over Corporate Investment Decisions in 2018

Each year The Economist Intelligence Unit (The EIU) issues a report forecasting how six industry sectors (automotive, consumer goods and retail, energy, financial services, healthcare, and telecoms) will develop globally over the coming year. Industries in 2018 highlights how traditional business models are likely to come under strain amid sweeping changes, many driven by technology. It also highlights how, despite continued global economic growth, companies will need to remain flexible and be wary of political risks, particularly in the European Union (EU).

The EIU report begins by asserting: "Traditional business models will come under strain amid sweeping changes, many driven by technology. Despite the decent economic conditions, political risk will hang heavily over investment decisions."

Furthermore, "This year's report, which gives our forecasts for 2018, highlights how old ways of making money are fast going out of fashion. Perhaps the starkest example of this is in retailing, where online selling is dramatically disrupting the traditional shopping culture. That industry is not alone. Telecoms companies are facing new challenges from technology players, heightening already fierce competition, while established players in carmaking and energy are struggling to adapt to the rise of clean technologies. Pharmaceutical companies face pricing and patenting dilemmas, while regulators are redoubling pressure on financial services companies."

From a business strategist perspective, I support the report's assertion that "companies will need to shake up their business models in 2018 to respond to these pressures. However, planning is easier than execution. New regulations, new competitors and new consumer demands will emerge during the year ahead in many markets, while the business environment will develop in ways that may be hard to predict."

What is more, according to The EIU, "High levels of political risk will also complicate matters in each of our six industries: automotive; consumer goods and retail; energy; financial services; healthcare; and telecoms. At least global economic conditions will not be bad—although not quite as good as in 2017."

Lastly, the report importantly notes:

Although White House policies continue to concern many companies in our six industries, the threat of a damaging trade war has receded since our 2017 report as geopolitical and business realities win out. Even so, global trade growth will decline from 4.6% in 2017 to 3.5% in 2018, mainly owing to a slowdown in China's economy. Political risks will remain strong, particularly in the EU: as Brexit edges nearer, the risk that the negotiations will break down remains high. In 2018 companies will need to remain flexible enough to deal with such risks, while also seizing the opportunities presented by continued global growth.

Do you agree that political risk will hang heavily over corporate investment decisions in 2018?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Report Identifies Hundreds of Africa's Most Inspirational and Dynamic Private, High-Growth Companies

The London Stock Exchange Group (LSEG) launched it inaugural Companies to Inspire Africa report, which, according to Xavier Rolet KBE, LSEG's CEO, identifies "hundreds of Africa's most inspirational and dynamic private, high-growth companies – ones which have come to the attention of major global investors." The companies listed in the report "boast an impressive average compound annual growth rate of 16%. On average, each firm employs nearly 400 people."

Highlighting African companies from the following eight sectors: agriculture, consumer services, ELITE Morocco, financial services, healthcare and pharmaceutical, industry, renewable energy, and technology & telecoms, the report "also highlights the unique role of female entrepreneurship, with approximately 12% of these high-growth companies led by female entrepreneurs, three times the average for companies across Africa." Moreover, Mr. Rolet says: "This new report demonstrates that high-growth, private companies are fast becoming the driving force behind African economies: developing skills, creating high-quality jobs and driving economic growth."

In her commentary, Priti Patel, Member of the House of Commons of the United States and Secretary of State, Department for International Development, rightly notes: "Entrepreneurship is the cornerstone of any vibrant economy. It is the motor that drives investment, job creation and economic growth. Throughout history, sustained, job-creating growth has played the greatest role in lifting huge numbers of people out of grinding poverty. It is entrepreneurship that delivers the life-changing progress that comes from growth in developed economies, and it is entrepreneurship that is beginning to deliver the same in Africa."

Ms. Patel further explains that "Companies to Inspire Africa showcases some outstanding stories of innovation, bravery and growth across the continent. It brings Africa's entrepreneurial spirit to an international audience, and I would like to congratulate all the companies featured for their vision, ambition and tenacity. It is their success that will drive Africa forward to a future of prosperity, and away from a reliance on international aid."

With respect to the technology and telecoms sector, the report notes that the growth in mobile phone usage in Africa will grew 344 percent from 2007-2016 and 314 tech hubs are active around the continent. In addition, $608 million is expected to be invested in African tech startups in 2018.

Dale Mathias, Chair of the Partners Forum, Africa Private Capital Group, USAID, correctly maintains that "Africa is distinguished by the enormity of the scope, range and size of commercial opportunities available to technology-based companies. This stems primarily from the continent's growth potential, its lack of commercial sophistication and the sheer size of its markets."

Importantly, Ms. Mathias says "technology can provide the solution to widespread African economic inefficiencies. Technological solutions will significantly enhance access to many types of products and services that businesses and consumers require, but that are not yet available, accessible or affordable."

Moreover, "With African mobile phone penetration exceeding 50%, numerous entrepreneurial tech companies have launched throughout Sub-Saharan Africa by creating products and services built upon the continent's established mobile phone infrastructure. Increasing access to the internet has resulted in the building of numerous such businesses across a broad range of verticals that include logistics, FinTech, agriculture, marketing, media, education and healthcare."

I strongly agree with Ms. Mathias that "Africa is poised for tremendous growth, and investment capital is becoming more available. Awareness of the region's potential is increasing and there exists today an abundance of capable and highly motivated entrepreneurs. Sub-Saharan Africa is truly an area of great investment opportunity, with technology destined to lead the way."

What role does Africa play in your global business strategy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.