Mapping the global economy of 2035, today

Over the next ten years, the global economy will be dramatically reshaped by two major trends. One of them is AI, which creates enormous new possibilities for rapid innovation, increased productivity and economic growth. The other is physical climate risk—the rising frequency of flooding, drought, heat stress, wildfires and other disruptions—which imposes meaningful economic constraints. PwC recently modelled these two destabilising forces to gauge how they could reconfigure industry boundaries in the coming decade. The resulting body of work offers business leaders a way to look beyond today’s uncertainty to understand the long-term value that’s being set in motion across the global economy. 

This industrial reconfiguration will manifest most clearly in six areas of basic human activity, which we call domains of growth: zones of economic activity and value creation, where companies collaborate in imaginative ways to meet human needs. Enormous amounts of value are already moving within and across these domains, creating both exciting growth opportunities and significant uncertainties. 

The graphic above shows traditional economic sectors on the left, domains of human needs on the right, and between them, the vast amounts of value in motion between now and 2035. 

What does this look like in practice? Consider the bustle of activity as carmakers, battery innovators, tech firms, charging station operators and many more companies develop electric vehicles and their supporting infrastructure. Dozens of partnerships and other less formal arrangements are bringing disparate players together to collaborate and accomplish things they never could achieve alone. Now zoom out to consider the full scope of activity, and you can see a constellation of players trying to serve a basic human need: how we move.

Framing competitive boundaries this way can be clarifying, helping companies to start identifying the self-imposed constraints that may limit their reinvention potential. What customers want may be changing in ways that can be difficult to predict, but the basic human needs—food, shelter, healthcare, mobility and so on—remain.

To make sense of the exponential possibilities ahead, leaders will need to think—and act—differently. Start by embracing a mindset featuring these characteristics: 

Think exponentially. Most people struggle to think in exponential ways. That’s a potential pitfall, because there are exponential qualities associated with AI (including its interaction with other advanced technologies) and in how climate risks can compound in a nonlinear fashion. Industry reconfiguration will reflect both of these effects, making an exponential mindset invaluable for leaders hoping to gain an advantage on competitors.

Take a big-picture view. Understanding the mutually reinforcing nature of the AI and climate forces at work helps leaders navigate the dynamic systems where companies will increasingly operate. For example, a wider perspective helps leaders see how new risks are creating new demand, reshaping supply chains and making some resources increasingly scarce—all in ways that will change over time.

Welcome uncertainty. Leaders hoping to nurture, build and scale ideas will need to navigate uncertainty effectively so that they can achieve economies of scale and scope, and make good choices about where to compete.