AI good and bad, demographics, and new trade corridors
WHAT’S NEW THIS MONTH?
This month, we took a deep dive into artificial intelligence (AI) and demographic shifts, examining how developments in both could reshape the global economy in the not-too-distant future.
Elsewhere, we explored trade connections between Asia and the Middle East, as well as some interesting opportunities in US airlines, Indian autos and Mexican retail.
So, what were the key talking points? Read on to find out…
Talking Point: Is artificial intelligence a force for good?
Theme: Disruptive Technology
AI has been productively employed in many areas of the economy for several years now. So, why has it generated so much attention over the past 18 months?
The answer is simple: Generative AI. Prior to 2023, most people believed that there was something uniquely human about the act of being creative, but models like ChatGPT have shown that AI is capable of this too. The response has been one of psychological shock for some, and polarisation for many.
To explore this polarisation, we put together a crack team consisting of Mark McDonald , James Pomeroy , Davey Jose , Camila Sarmiento , Yaryna Kobel , Floria Tosca Kerekes and Henry Ward . Together, they assessed the arguments and evidence for the good, bad and ugly aspects of AI.
THE GOOD ?? There is a lot of hype around the technology and its potential to drive productivity.
THE BAD ?? Some are worried about the potential side-effects, such as jobs being displaced.
THE UGLY ?? The most pessimistic critics see scope of significant harm or even an existential threat to humanity.
Our thoughts?
AI has the potential to drive significant improvements in productivity and open up new opportunities for businesses, but not everyone will benefit equally. The most likely outcome is probably somewhat more prosaic than the arguments at either end of the spectrum.
Clients of HSBC Global Research can read our team’s latest exploration of AI by downloading the report:
FULL REPORT ?? https://www.research.hsbc.com/R/84/cZBTdsnmPDp7GJ ?
Talking Point: How will shifting demographics shape our world?
Theme: Demographics
Demographics can be a divisive topic. For some, it’s one of the most important drivers of the global economy. For others, it can seem too long-term or irrelevant.
We agree with the first perspective.
In their latest report, James Pomeroy and Herald van der Linde explain why demographic shifts could be one of the most important factors driving the underlying shape of the world.
?? How rapid ageing could have major implications for future debt dynamics
?? Why demographic data matters for technology adoption
?? How attitudes towards energy transition could change
?? Why the future of living is looking increasingly urban
?? What growth in emerging markets could mean for the rest of the world
Our thoughts?
Demographics data may be relatively slow-moving compared to other macro indicators, but we’re living through the fastest pace of demographic change in history. What scenario we go down in terms of population sizes is as important as any other single factor in determining potential growth rates – crucial for thinking about longer-term interest rates and valuations.
Clients of HSBC Global Research can get all the analysis by reading the full report from the following link:
FULL REPORT ?? https://www.research.hsbc.com/R/84/CHPQVkGmPDp7GJ ?
Talking Point: Can Asia and the Middle East seize the trade opportunity?
Theme: Trade Flows
Over the coming years, economic connectivity between Asia and the Middle East is set to soar, expanding well beyond energy trade. Annual two-way goods trade is projected to more than double, from around USD950bn in 2022 to over USD1.9trn by 2035.
So, what’s driving this growth?
Simon Williams , Frederic Neumann , Justin Feng and Shanella Rajanayagam explore this question further in their latest report. In their words:
“Besides energy, the two regions also complement each other in many areas of trade, investment, and people exchange. UAE non-fuel exports have also increased meaningfully over the past two decades. And, perhaps most importantly, the major economies on both sides are still committed to opening to the world.”
Our thoughts?
We have long argued that integration between emerging economies is one of the keys to unlocking global growth. Recent economic slowdowns and sluggish post-COVID-19 recoveries in many emerging markets may have weakened this assumption, but we remain highly optimistic about the long-term impact of greater connectivity between Global South economies.
Clients of HSBC Global Research can take a closer look at why economic connectivity between the two regions could be set to soar by reading the full report:
FULL REPORT ?? https://www.research.hsbc.com/R/84/rxmtKgCmPDp7GJ ?
So, there you have it, the main thematic talking points for this month. But there’s still plenty more to discuss. Clients can see the rest of our talking points in our full report below.
FULL REPORT ?? https://www.research.hsbc.com/R/84/RhmqMKFmPDp7GJ ?
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