The briefing explores structural drivers of inflation and their impact on the global economy and business environment. Factors such as demographics changes, globalisation reset, decarbonisation, AI revolution and higher debt levels would add to the higher price pressures. Companies will need to monitor and adapt to the changing macro environment.
This report comes in PPT.
Global inflationary pressures are easing as a result ofsupply chain improvement and effective monetary policies, yet at the same time structural drivers of inflation become more visible. Changes in the labour markets, geopolitical tensions and technology changes are expected to add to the higher price pressures in the long term.
Demographic changes and shrinking labour pool will be among the key challenges to the global economy over the next decade. Worker shortage will continue to add to the wage pressures and is likely to slow down productivity growth. This could add 0.2-0.4 p.p. to the baseline inflation.
Persistent geopolitical tensions lead to higher economic fragmentation and loss of some efficiency gains across the global supply chains. Companies will need to upgrade existing supply and production networks and may face higher costs of input materials. This could add 0.2-0.5 p.p. to the baseline inflation.
Global economy enjoyed a decade of low interest rate environment, and this led to rising private and public debt levels. This can alter behaviour of the market participants in the long term and make higher inflation more tolerable, as it reduces real value of debts.
Higher price pressures will impact consumers by eroding their purchasing power and directly increasing costs of utilities and essential goods. Companies will need to find ways how to improve operational efficiency and provide greater value for money for consumers.
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