The Next Wave: The Global Megatrends Powering Long-Term Growth
With heightened geopolitical tensions, rapid technological disruptions, and shifting economic paradigms, investors face risks and opportunities that are vastly different than they were as recently as five years ago.
Bill Ford, Chairman and CEO of General Atlantic, and Nobel laureate economist and General Atlantic advisor Michael Spence recently discussed the trends that will drive the global economy moving forward.
The post-Covid economic backdrop
Spence: Following the Global Financial Crisis, we entered a period of low interest rates, low inflation, and ample liquidity, which created a stable backdrop for investing. This economic environment shaped decision-making for more than a decade. However, as we emerged from the Covid pandemic, this framework began to shift.
We are now facing more frequent and severe shocks. These events – climate crises, wars, pandemics, geopolitical tensions – continuously knock the global system out of equilibrium, requiring businesses and investors to adapt. At the same time, we are experiencing supply constraints – including aging populations, declining workforces, and shifts in labor markets – that were not factors before. These structural changes have created an imbalance, undercutting the demand-driven growth of the past.
A new approach to identifying and managing risk
Ford: It has changed how we identify and manage risk. For most of my career, I have been able to follow the more traditional, macroeconomics-based approach when evaluating a potential investment. We would consider factors like economic growth, interest rates, dollar strength, and inflation to guide our decision-making process. The geopolitical landscape was considered relatively stable and was rarely a focus of the investment process. However, the global investment environment has shifted dramatically, and geopolitical and geoeconomic issues now play a far more critical role.
Today, we live in a multipolar, volatile world. As nations increasingly prioritize their own economic and national and physical security interests, we expect to see the greatest growth in areas where stability and opportunity align.
Megatrends will drive a multi-year innovation cycle
Spence: We see four overarching themes that will reshape our lives: the acceleration of technology and the expansion of the digital economy; advancements in healthcare and biology; the energy transition and sustainable innovation; and global demographics and the emergence of new consumers. These trends will affect nearly every sector, empowering companies and entrepreneurs to disrupt legacy business models and drive transformational change. Together, we expect there to be more than $25 trillion in annual spending in tech, healthcare, and on the energy transition by 2030.1
Overlapping opportunities
Ford: Nothing happens in a vacuum. Innovation is essential – whether that’s focusing on new models to reduce costs or tapping into AI to improve doctor and patient experience. It’s hard not to get excited about all that is coming.
Life sciences is at a tipping point, where the convergence of technology and biology is allowing us to understand the biology of disease in ways previously unimaginable. We see the most exciting opportunities with growth-stage life sciences companies that have proven technologies to unlock new biological insights or services and products that accelerate innovation and productivity in clinical pharmaceutical trials and biomanufacturing.
Overall, we expect that life sciences and healthcare will be one of General Atlantic’s richest veins for years to come. Our job as investors is to take these macro-level trends and make the micro-level decisions around investing in particular companies and at what valuations.
Shifting skill sets
Ford: Some opportunities will be capital-intensive. Take energy transition and sustainability, which will require building out of solar and wind farms, the development of green steel and green cement, and other forms of innovation. That’s not the asset-light model that many firms are comfortable with, where the focus is on human capital and intellectual property. We’re moving to a world of engineering and building tangible assets. That takes a different skill set, with a different way to think about risk.
To set our firm up to capture these investable opportunities, we completed our acquisition of Actis, a leading global investor in sustainable infrastructure, in October 2024. As a combined firm, we place ourselves right at the center of the intersection of the energy and digital revolutions.
Overlooked human dynamics
Spence: Many investors don’t pay enough attention to the demographic trends and migration shifts that are happening in front of our eyes and shaping investment opportunities. On one side you have tens of millions of new middle-class consumers emerging in developing countries, and with them come more demand for healthcare, for consumer goods, and all the other things that are markers of improving fortunes. And on the other, you have aging populations in the developed world, which is going to have to adjust to longer life spans, creating opportunities as well as challenges in not just healthcare, but also financials and consumer services.
Reasons for optimism
Ford: The only way forward is growth. You can get real growth from two things: increasing productivity or increasing population. AI is already showing us ways that productivity will improve. If we can bring a significant number of participants into the global economy it will bring more people into the workforce and create more demand that will benefit all of us.
Contributors
Bill Ford
Chairman and Chief
Executive Officer
Mike Spence
Senior Advisor
1McKinsey & Company. “Global Digital Trends: Insights from 2023.” Dec. 2023., United Nations, International Telecommunication Union. “A Third of the Global Population Still Without Internet: UN Study.” Sept. 2023., World Bank. “COVID-19 Drives Global Surge in Use of Digital Payments.” June, 2022.
2World Bank, Institute for Health Metrics & Evaluation (“IHME”), and McKinsey data as of Dec. 2023., McKinsey Global Institute. “The Bio Revolution: Innovations transforming economies, societies, and our lives.” May 2020.
3Bland, Rob, Anna Granskog, and Tomas Nauclér. “Accelerating Toward Net Zero: The Green Business Building Opportunity.” McKinsey & Company, 14 June 2022., McKinsey & Company. “An affordable, reliable, competitive path to net zero.” McKinsey & Company, 30 Nov. 2023.
4Leading management consultancy data as of December 2023. World Economics, “World Markets of Tomorrow,” GDP projected forward for 2025-2030 using 10 year Compound Annual Growth Rate (CAGR) for previous decade (2012-2022). Investment themes are subject to change over time. A list of all current investments can be found on our website at www.generalatlantic.com. Please note that this list does not include GA Credit investments.
5Legal Disclaimer: The views expressed herein are the personal views of Dr. Michael Spence and Bill Ford and do not necessarily reflect the views of General Atlantic (“GA”). This References to “we”, “us,” and “our” refer to Dr. Spence and Bill Ford and not of GA. This document is not research and should not be treated as research. The views expressed reflect the current opinions and views of Dr. Spence and Bill Ford as of the date hereof and neither Dr. Spence, Bill Ford nor GA undertakes to advise you of any changes in the views expressed herein. Opinions or statements regarding financial market trends are based on current conditions and are subject to change without notice. This article has been prepared solely for informational purposes. The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The information herein may contain projections or other forward-looking statements regarding future events and is only current as of the date indicated. Neither GA nor Dr. Spence and Bill Ford assumes any duty to, nor undertakes to update forward looking statements.
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