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| | Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms
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| | | | So where is the global economy headed? This question remains top of mind for corporate leaders as they continue to monitor the potential business impacts of tariffs and other trade-related developments. The answer depends on whether the world chooses a path that will increase cooperation and stability among countries and within societies. This week, we look at scenarios for future global growth and how they might unfold.
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| | | For economies to prosper, they need to foster stable and secure investment environments and reliable partnerships: in other words, a strong foundation of balance and trust. That’s according to McKinsey Senior Partners Cindy Levy, Olivia White, Shubham Singhal, and Sven Smit and their coauthors, who advise business leaders to look beyond current trade and budget deficit debates for five signs of where economies are on the path to prosperity. “Business leaders can’t, of course, change the macroeconomic environment,” the authors say. “What they can do is seek to understand the range of plausible outcomes of the new dynamics in the global economy and identify decisions to take in advance or contingent on how uncertainty resolves.” Among the indicators of economic acceleration that can inform corporate strategy decisions: decreasing trade frictions, low inflation supported by central bank action, and improving consumer sentiment. To learn more from McKinsey experts about the business impact of tariffs and global trade, register now for a McKinsey Live virtual event on Thursday, May 22. | | |
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| From geopolitical uncertainty to supply chain disruptions to regulatory changes, global companies are facing headwinds from many directions. Jacob Aarup-Andersen, CEO of the global beverage giant Carlsberg, says these challenges call for building resilience across the organization. Carlsberg’s efforts to do so include empowering decision-making at all levels, creating a trusting culture so people speak up when they see problems, and testing multiple risk scenarios when expanding the company’s geographic or product portfolio. “We’ve learned that, typically, it is not the gradual crises that are the most dangerous, but the unforeseen ones,” Aarup-Andersen says in an interview with McKinsey Senior Partner Kim Baroudy. “Those are the moments when resilience is tested—when you really see whether you have the kind of organization that can successfully analyze, adapt, recover, and emerge stronger.”
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| The job of corporate boards has become more complex and demanding in recent years. Leadership teams are seeking more and more guidance on how to manage fast-evolving issues, such as geopolitics, cybersecurity, and gen AI. While geopolitical risk was not historically a top concern for boards as a stand-alone topic, it now infuses many key areas of the business, including growth, innovation, technology, and people, notes McKinsey Partner and Global Director of Geopolitics Ziad Haider. “It is fundamentally a new muscle for many boards, who came of age in a very different era where they weren’t having to think about geopolitical risk, segmentation, and fragmentation,” he says in an episode of McKinsey’s Inside the Strategy Room podcast. Senior Partner Frithjof Lund adds that many organizations are discussing whether their boards have the right expertise to tackle geopolitical risk—with some conducting trainings and bringing on external experts as directors to boost their capabilities. “It’s the same question around some of the technology trends [and] some of the macroeconomic trends. How do we ensure that we have a composition that reflects the strategic needs of the companies?” Lund says. | | | Lead by working toward balance and trust. | | | | | — Edited by Eric Quiñones, senior editor, New York
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