2022 Recap: 5 Trends that Shaped the Year
FUTURE PROOF – BLOG BY FUTURES PLATFORM
2022 was a year of great upheaval and change, with a series of political and economic crises that will reverberate for many years to come. Looking back to the year, our team of futurists highlight five trends that shaped the trajectory of 2022 and will continue to shape the future.
1. GEOPOLITICAL TURMOIL IS FRAGMENTING THE GLOBAL ECONOMY
If 2022 could be characterised by one phenomenon, it would likely be the war in Ukraine and the ensuing geopolitical turmoil. Many of the prominent trends that shaped the year were direct or indirect results of the war, such as rising energy and food prices and supply chain disruptions.
Russia's invasion of Ukraine sent shockwaves across the world after a decades-long period of relative calm and showed that full-scale war is still a possibility. The West was united in its response to Russia's actions, and the year saw a rapid economic decoupling from Russia.
In addition to the war in Ukraine, 2022 also saw a deepening US-China rivalry and escalating tensions between China and Taiwan. These developments further fragmented the global economy, with trade and investment patterns increasingly following geopolitical alignments. The US put in place an unprecedented Chips and Science Act to support domestic semiconductor manufacturing and announced export controls on AI and semiconductor technologies to China.
Looking into the future, the world seems to be heading towards a new multipolar order, with global trade routes being re-formed around ideologically-aligned economic blocs centred around the US and China. However, not all countries are on board with these changes yet – many nations of the Global South continue to maintain economic ties with both sides of the current geopolitical divide. Hence, the years ahead will reveal how the new alliances and economic ties will take shape.
"Even though the camps may pressure other countries to choose sides, some states that are either massive in size, such as India, or in possession of strategic resources, like Saudi Arabia and the UAE, may try to balance between Beijing and Washington. Also, economies in, e.g., Southeast Asia may try to cultivate good relations both with their protector, the US, and their largest trading partner, China," says Max Stucki, Foresight Analysis Manager at Futures Platform.
2. HIGH INFLATION: THE END OF CHEAP MONEY
Inflation was undoubtedly one of the biggest buzzwords of the year, and consumers worldwide have felt the effects of the rising costs of living.
The period between the 2007-2008 financial crisis until mid-2021 was unprecedented in terms of inflation. Interest rates were kept historically low and inflation was almost non-existent, even though central banks around the world kept increasing the supply of money. When the pandemic hit in 2020, major central banks pumped even more money into their economies to keep them afloat.
Fast forward to 2022, the excessive economic stimulus, supply chain shortages, and the Russia’s invasion of Ukraine together ushered in a new phase in the world economy, with many countries seeing their highest inflation rates in decades.
Global median inflation rate. Source: IMF Blog
High global inflation has forced most central banks to make steep rate hikes. The US Federal Reserve embarked on its swiftest tightening cycle since the 1980s, and other central banks followed suit. Thus, we may look back to 2022 as the year when the era of cheap, abundant money came to a firm end.
According to Futures Platform’s economist Eljas Aalto, higher inflation rates can have both positive and negative consequences. “In the short run, an increase in the inflation rate will hurt ordinary consumers in the form of weakening purchasing power. In the long run, a higher inflation rate might actually be good news: the real value of debt will decrease, which can sometimes make homeowners and indebted countries better off. For economic stability, the most important thing is that inflation rates are stable and predictable,” he explains.
3. EXPONENTIAL GROWTH OF BIG TECH SLOWED DOWN
Rising interest rates and evaporating capital in 2022 have led to a downturn in stock markets, and tech stocks were hit particularly hard. Microsoft, Amazon, Tesla, Apple, and Google shares all saw double-digit percentage losses in their value this year, and the tech sector collectively lost $400 billion in value.
Amazon, Meta, Netflix: Why Big Tech Is Facing Massive Layoffs. Source: Wall Street Journal
Tech companies thrived during the pandemic and made huge profits, but as societies reopened, their revenue growth experienced a slowdown in 2022. This, coupled with rising interest rates, suggests that the time of exponential tech growth may be nearing its end.
Some analysts believe that this is a sign of the tech sector reaching its peak maturity; others argue it is a necessary 'reset' for an industry that has been awash in cash for over a decade. Regardless, the slowdown of big tech might be a boon for markets: It may open up opportunities for more competition and innovation, with new companies coming to the fore to fill in the void. On the other hand, as investors turn their focus to short-term profits amidst rising interest rates, betting on longer-term projects will likely become riskier for big tech, which may end up stifling innovation in the larger tech sector.
As we leave 2022 behind, we're entering a new era where big tech becomes more vulnerable to outside challenges. While the big tech companies won't be going away anytime soon, they may not be as disruptive and fast-growing as they once were.
4. GENERATIVE AI WENT MAINSTREAM
After a decade of research, 2022 was the year deep-learning AI finally made its way into commercial applications, allowing the larger public to explore its creative potential for the first time.
OpenAI launched its text-to-image generator DALL-E 2 in April and its large language model chatbot ChatGPT in late November, both of which were made available to the public. ChatGPT quickly amassed 1 million users after its launch, with people using the tool to develop apps, compose emails, create recipes, and even write movie scripts. Other text-to-image deep learning models, such as Stable Diffusion and Midjourney, were also released in 2022.
“A photo of an astronaut riding a horse” #dalle pic.twitter.com/4UDwErtEbZ
— OpenAI (@OpenAI) April 6, 2022
The mainstream availability of generative AI tools also unleashed larger cultural debates over the ethics of AI-generated artwork, what deep-learning language models will mean for the future of education, and more.
Like any novel technology, generative AI tools will disrupt several industries and revolutionise knowledge and creative work. "After catching a glimpse of an AI-powered future in 2022, we can expect to see more conversations, experiments, and innovative applications of generative AI in the coming years as we continue to explore this groundbreaking technology," says Shiori Ota, Senior Foresight Analyst at Futures Platform.
5. LANDMARK CLIMATE LEGISLATIONS
In general, climate experts seem to agree that progress in climate action has been slow in 2022. Governments worldwide turned their attention to the energy and financial crises brought about by the war in Ukraine, with the world's major economies reopening old power plants to reduce their dependence on Russian supplies.
Nonetheless, progress has been made on a number of fronts. Several major environmental agreements and laws were signed this year, making 2022 a historic year for the planet.
In August, the US, the world's second-largest climate polluter, enacted the most ambitious and comprehensive climate law in the country's history. The Inflation Reduction Act will devote $369 billion to climate solutions and is projected to reduce emissions to around 40% below 2005 levels by 2030.
In a breakthrough step towards justice for developing nations, historically polluting countries also agreed to set up a loss and damage fund and provide financial compensation for countries severely impacted by climate-induced disasters.
Another milestone agreement was signed at the UN biodiversity conference, where 188 countries pledged to protect 30% of the planet's land and oceans by 2030. The agreement marks the most significant effort so far to curb biodiversity loss. Additionally, 175 countries signed a legally binding agreement to end plastic pollution by 2025.
Overall, 2022 marked the year when nations made the biggest investments into clean energy and climate solutions to speed up the green transition. However, this past year has also shown us how climate action can fall off the agenda in the face of political and economic crises that require urgent action.
