two trends in 6th and 8th place respectively. The expecting job decline minus those expecting last section of this chapter will probe which specific growth) is almost 40%. Conversely, the Care, technologies businesses expect to drive the Personal Services and Wellbeing and Government reconfiguration of labour markets. and Public Sector industries expect little impact on jobs from these trends. Organizations operating The three key drivers of expected net job in Latin America expect to be hit hardest by these destruction are forecast to be slower economic trends, with net job decline expectations of around growth, supply shortages and the rising cost of 40%, compared to a lower impact of around 25% in inputs, and the rising cost of living for consumers. Europe and South Asia. Employers also recognize that increased geopolitical divisions and the ongoing impact of the COVID-19 pandemic will drive labour-market Changing economic geographies disruption, with an even split between employers expecting these to have a positive and negative impact on jobs. Driven by economic, environmental and geopolitical trends, the world economy is undergoing a The following sections now briefly explore three structural transformation which challenges the facets of this picture more closely: growth and traditional drivers of globalization, with diverging inflation, changing economic geographies and the outcomes.36 Though factors such as climate green transition. change call for integrated global policy-making and international cooperation, disruptions such as threats to the resilience of value chains due to Growth and inflation COVID-19 and geopolitical conflict may make doing business locally more attractive than relying on the stability of international partners. At the beginning of 2023, the global economic situation was shaped by a combination of By comparing how Future of Jobs survey vulnerabilities that caused high global inflation at respondents who operate globally (in five or more 8.8% in 2022 – above the pre-pandemic level of countries) expect global trends to impact their 3.5% – and slowed economic growth which the IMF business to expectations of those who have a forecasts to be 2.9% in 2023, below the long-term single base of operations, this report finds that there average of 3.8%.35 These vulnerabilities include are no significant differences between these groups. the monetary and fiscal expansion that eased pressure during pandemic lockdowns but enabled These global trends have led to businesses higher inflation, exacerbated by higher food and considering ways to enhance resilience in gas prices resulting from geopolitical tensions and their supply chains, through “nearshoring”, 37 Russia’s invasion of Ukraine. Several central banks “friendshoring” and other ways to distribute risk have taken measures to counteract these trends by (e.g. China+1 strategy among multinational firms – increasing interest rates. whereby they maintain production bases in China while diversifying suppliers to other countries). This Over the 2023–2027 period, employers expect possible supply-chain restructuring is particularly these precarious economic conditions to continue relevant in East Asia, which could see benefits from to impact their business: as previously noted, diversification away from China, but equally could three quarters of respondents expect the rising see potential reduced demand from European and cost of living and slower economic growth to drive North American businesses moving supply chains transformation in their organizations in the next closer to the operation bases. five years. Of the 10 economies with the highest proportion of businesses expecting the rising cost- This report analyses these developments by of-living to drive transformation, five are from the assessing three macrotrends related to inter- MENA region. The countries most concerned by country dynamics and supply chains: increased slower economic growth are more distributed, with geopolitical tensions, localization of supply three of the top 10 (including three of the top four) chains, and supply-chain shortages’ impact on countries from East Asia and the Pacific, with the organizations’ transformation. Figure 2.3 shows remaining seven countries split between MENA and that East Asian countries dominate the top 10 Europe. countries for expectations that these trends will drive transformation. Against this backdrop, survey respondents expect economic challenges to be the greatest threat Respondents have differing expectations of the to the job market in the next five years, with impact these three trends will have on jobs, with slower global economic growth, supply shortages mixed opinions (net neutral) on the impact of and rising costs, and the rising cost-of-living all increased geopolitical divisions, strongly positive expected to significantly displace jobs (Figure expectations for supply chains becoming more 2.2). This prediction is more pronounced in the localized and strongly negative expectations for Agricultural and Natural Resources, Manufacturing, supply shortages and rising input costs. With East and Supply Chain and Transportation industries, Asian countries expecting the greatest impact on where the net decline (the fraction of respondents business transformation from these trends, this Future of Jobs Report 2023 22