Megatrends

According to avid followers of the legendary 16th-century seer Nostradamus, some of his dire predictions for 2018 include the biggest eruption of Mount Vesuvius ever, a series of strong earthquakes and major volcanic eruptions along the Pacific Ring of Fire (that includes the Philippines), global economic collapse, World War III involving the United States, Russia, China and North Korea, and a sizeable asteroid slamming into Earth and causing planetary disaster similar to the last time this happened billions of years ago, which led to the extinction of dinosaurs.

Some say a number of Nostradamus prophecies unfolded as predicted, including the rise of Napoleon and Hitler, Kennedy’s assassination, the infamous 9/11 terrorist attack, and the death of Princess Diana, thus giving him sufficient credence to merit serious attention. Others say that most of his prophecies have not materialized and those that supposedly did were due mainly to the imaginative extrapolation of his forecasts done mostly post facto.

Assuming any or all of his 2018 predictions come true, that would be a total game-changer, to put it mildly. On the other hand, if the relatively low percentage of accuracy of his prophecies proceeds for 2018, we should instead turn our attention toward a number of important megatrends that are even now changing the shape of our world as we know it and will determine our future more accurately than Nostradamus. These megatrends, as identified by the Emerging Markets Forum think tank, involve demographics (changing global population), urbanization, international trade, globalization of finance, the rise of emerging economies notably China, the rise of a massive middle class, intense competition for finite natural resources, technological progress particularly in the area of artificial intelligence, climate change, and the continuing communications revolution. There is not enough space to discuss each of these in this column but many of these are not mutually exclusive and some have direct implications on the Philippines.

To cite a few, with respect to demographics, the world is facing two challenges — a rapidly rising population in the less developed and troubled regions of the Middle East and Africa, and an aging and even declining one in the more developed regions and countries such as Europe and Japan. These scenarios require significant job creation and redefinition, which will however be taking place alongside a digital revolution that is rapidly replacing human labor with artificial intelligence machines, causing a significant displacement of existing labor in traditional professions even as the labor force increases. The near-term direct implication to the Philippines will be its effect on the BPO (business process outsourcing) industry, one of the present pillars (the other being remittances) of our economy. Thus, preparation for this phenomenon should be taking place so as not to catch our economy by surprise.

On the rise of China, even the recent Asean meetings in Manila proceeded with an air of inevitability about it. For once, the United States appeared to be playing second fiddle on the world stage, as country after country was signing trade and other agreements with China. The rise of China may portend an overall rise of Asian leadership of the world economy that would change the balance of power and spheres of influence from what they are today. The direct implication to the Philippines lies in whether or not we are able to deftly maneuver our economy’s destiny toward a positive position as we traverse potentially turbulent global political waters.

Finally, the phenomenon of urbanization is already as clear as day in the Philippines, where we grapple daily with, among others, near-gridlock in traffic. Things will get worse before they get better, until we come to the realization that what we face is not just a traffic problem but also one involving urban congestion, and take determined steps to disperse our urban populations with a combination of sensible intermodal public transport and the creation of new satellite townships and suburban communities.

Of course, if Nostradamus prevails, all bets are off.

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Roberto F. De Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.