Market Brief

Three innovations that could drive the global economy

For much of the past decade, economic growth has been constrained by ageing populations, high debt and weak productivity.

Yet beneath the headlines, three structural changes are gathering momentum.

Economists refer to technologies that transform almost every sector of the economy as General Purpose Technologies. The steam engine, electricity, and the internet are classic examples. Today, AI appears to be joining that list, while GLP-1 medicines and commercial space could prove to be equally significant productivity catalysts.

Unlike cyclical trends, these are technologies capable of improving productivity across the global economy.

Let’s review each one in turn:

1. Artificial Intelligence

Like it or loathe it, Artificial Intelligence is here to stay. AI is often viewed simply as another technology sector. It is more accurately described as a new form of infrastructure.

Just as electricity transformed every factory rather than creating a single successful company, AI has the potential to increase productivity across virtually every knowledge based profession.

From software development and legal research to healthcare and engineering, routine cognitive work is increasingly becoming faster, cheaper and more accurate.

Global AI market size forecasts to 2030 by segment ($ billions)

 

The impact of AI on industrial robotics and automation may rival the benefits of AI models.

The Rise of the Robots:
New industrial robots installed per year

2. The GLP-1 Health Revolution

You may be aware of weight loss drugs such as Ozempic, Wegovy, and Mounjaro, which are GLP-1 medications. GLP-1 (Glucagon-like peptide-1) is a natural hormone that suppresses appetite, delays digestion, and regulates blood sugar.

The investment opportunity in GLP-1 medicines extends far beyond pharmaceutical companies. Obesity has become one of the largest economic drags facing developed economies, contributing to lower workforce participation, higher healthcare spending and reduced productivity.

These treatments have the potential to materially reduce obesity over the coming decade, with implications extending well beyond healthcare. Healthier populations could remain economically active for longer, reduce pressure on healthcare systems and improve productivity across entire economies.

If GLP-1 medicines materially reduce obesity, the economic benefits could extend far beyond pharmaceutical company profits.  The Financial Times has even suggested America may have arrived at “Peak Obesity” as demonstrated in this chart, thanks to these medications:

US obesity rate
Age adjusted obesity rate among adults aged 20 and older (%)

Source: FT analysis of US National Health & Nutrition Examination Survey. FT graphic: John Burn-Murdoch

GLP-1 Medications could raise GDP
(by 0.4% in a baseline scenario, and by over 1% in a plausible upside case)

Source: Goldman Sachs Global Investment Research

3. The New Space Economy

For decades, access to space remained prohibitively expensive. Reusable rockets have fundamentally changed that equation.

Launch costs have fallen dramatically over the past twenty years, opening entirely new commercial markets including satellite communications, Earth observation, defence, navigation and eventually manufacturing beyond Earth.

History suggests infrastructure revolutions create opportunities far beyond the companies building the infrastructure itself. Railways enabled retail. The internet enabled e-commerce. Lower launch costs may prove equally transformative, enabling an entirely new orbital economy.

Cost of space launches to low Earth orbit
Cost to launch one kilogram of payload to low Earth orbit, adjusted for inflation.

US commercial space launches 1990 to 2026
(*2026 data to April)

Source: Statista, US Dept of Transportation, Federal Aviation Administration

Morgan Stanley projects the global space economy could reach $1 trillion by the early 2030s, up from under $600 billion today – growth driven not by rocket launches themselves, but by the industries they make possible.

The Bigger Picture

Each of these technologies is important on its own.

Together they become far more powerful:

• Artificial intelligence improves how we work.
• GLP-1 medicines improve who is able to work, and for how long.
• Space expands where we work, pushing the boundaries of the global economy itself.

Historically, electricity, the steam engine and the internet all produced productivity gains that lasted for decades.

No one can know whether markets will continue their current advance, and periods of volatility are inevitable. However, investors sometimes underestimate how profoundly new technologies can reshape earnings, productivity and economic growth over long periods.

Bottom line: Markets ultimately follow earnings, and earnings ultimately follow productivity. If these three revolutions fulfil even part of their promise, the long term outlook for global growth could prove significantly stronger than headlines suggest.

Disclaimer: Past performance is not a guarantee of future results. This document is for informational purposes only and does not constitute investment advice.