Allianz Risk Barometer 2024 -
Rank 9: Market developments

Firstly, the end of comprehensive globalization. Protectionism no longer only affects flows of goods, but increasingly money and capital, information and data, as well as people and know-how. In the name of national security, the world is being covered with a network of investment restrictions and sanctions. For companies, access to new markets, new ideas and new employees is thus considerably restricted. Accelerated consolidation is likely to be the result.

Secondly, the end of cheap labor. For a long time, globalization was synonymous with a steady expansion of access to production factors, especially labor. This is no longer the case. Demographic change means a shortage of (skilled) labor worldwide. The war for talent is reaching a new level. Medium-size companies in particular will find it difficult to survive here. While large companies are favored by their brand and benefits, smaller businesses can score with their greater self-determination and entrepreneurial spirit. Stuck in the middle is the worst place to be.

Thirdly, the end of innocent technology. There have always been warnings about the negative consequences of new technologies. And with regard to the internet and social media, many fears have now unfortunately materialized. With artificial intelligence (AI), however, the potential danger has reached a new dimension. As a general-purpose technology, AI will fundamentally change every industry and area of life. The contours of AI-powered societies and economies remain unclear at this stage; consequences are difficult to assess. But if last year’s market development is any indication, one mundane conclusion can be drawn: AI is likely to lead to greater market concentration as the upswing in the US stock market in 2023 was mainly driven by a handful of tech giants – fueled by the AI fantasy about their profits.

“These three drivers have a simple message for the majority of SMEs: market challenges will multiply in the new age. Worries are not misplaced,” says Ludovic Subran, Chief Economist at Allianz.