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Global GDP Growth AT A Glance
VUCA vs BANI
These are dynamic times, with global economic attention shifting toward Asia and Africa, even as frameworks like VUCA and BANI highlight ongoing challenges. India's macroeconomic performance is at its peak in years, but converting GDP growth into consistent profit-and-loss results for India Inc remains a tough task. This disparity stems from factors such as government-led capital expenditure, GCC-driven services growth, sector-specific profit concentration, and sudden policy or tariff shifts. The top three global risks continue to dominate and disrupt: State-Based Armed Conflicts, Extreme Weather Events, and Geoeconomic Confrontations.
The term VUCA, an acronym created by the U.S. Army War College in 1987, describes the shifting conditions after the Cold War. The world moved away from clear and stable power structures to dynamic and often chaotic developments. It highlights four characteristics that define the modern world's uncertainty and complexity:
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Volatility: Fast and unpredictable changes, like sudden market shifts or technological advancements
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Uncertainty: Challenges in predicting future events, even with available information
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Complexity: Numerous interconnected factors that make it hard to pinpoint causes and effects
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Ambiguity: Confusing or contradictory information open to various interpretations
These challenges demanded a high level of adaptability and innovative thinking from managers and organizations. The framework that had worked well since 1987 began to falter. Then COVID-19 revealed vulnerabilities in our systems. Supply chains didn’t just wobble—they collapsed. Decision-making wasn’t just tough—it became paralyzing. In the post-COVID world, a new framework called BANI has emerged, coined by Jamais Cascio, a distinguished fellow at the Institute for the Future.
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Brittle: Organizations are fragile and prone to breaking under pressure
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Anxious: Organizations constantly anticipate the next crisis or disruption
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Non-Linear: The world is no longer predictable or straightforward
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Incomprehensible: Organizations struggle to understand complex and chaotic environments
In April 2025, the United States disrupted global trade norms with broad tariffs, clearly reflecting a BANI framework in play. Six months later, the impact has been moderate, with only a slight downgrade in growth. This is primarily due to successful trade negotiations, exemptions, and the restraint shown by most countries, keeping the trading system functional.
Concluding that the Trump Tariff surge had no effect on global growth would be both premature and inaccurate. The US statutory effective tariff rate remains high, and rising trade tensions lack assurances of lasting agreements, making it too early to draw conclusions. Additionally, it's inaccurate to ignore other economic forces. In the US, tighter immigration policies are reducing the foreign-born labor supply, adding another supply shock alongside tariffs. However, cooling labor demand has kept unemployment stable. Loose financial conditions, a weaker dollar earlier in the year, and booming AI-driven investments are boosting economic activity while amplifying price pressures from supply shocks.
In economies impacted by tariffs, other factors are mitigating the effects. These include managing higher tariffs through weaker real exchange rates, redirecting exports to Africa, Asia, and Europe, and receiving fiscal support. Germany’s fiscal expansion is driving growth in the euro area, while emerging markets and developing economies are benefiting from easier global financial conditions, partly due to the US dollar's depreciation and their inherent resilience. Despite these offsetting factors, the tariff shock is further weighing on already weak growth prospects.
Our brain creates our experience by predicting what will happen next, using past events and current sensory input to shape reality moment by moment. When uncertainty becomes overwhelming, the brain doesn’t just struggle—it burns massive energy trying to make sense of the chaos. In VUCA, predictions were tough but still possible. In BANI, the prediction system collapses entirely, pushing our brains to their limits. We assumed the global balance of power would stay the same. We took America for granted. We took the world for granted. We treated the status quo as a given. We believed the post-World War II status quo wouldn't change, that the bipolar world order would last forever. But the things have changed completely.
Stable systems can suddenly fail without warning. When the systems we rely on collapse, our brain’s prediction errors skyrocket. Since emotions are built from predictions, these failures can trigger intense negative feelings. The loss of certainty forces the brain to work overtime, scrambling to build new predictive models.
In 2024, Bob Johansen and Jamais Cascio collaborated to create strategies for understanding mental models essential for thriving in chaotic times. Their work focuses on empowering people, organizations, and communities to navigate an increasingly unstable world. Brittle situations are countered with Bendability; Anxiety is addressed through Attentiveness; Nonlinear challenges require Neural Flexibility; and the Incomprehensible calls for Interconnectedness. These frameworks are not direct answers to specific BANI dilemmas but provide guidance for facing crises with clarity.
A flexible approach highlights adaptability, resilience, and the ability to handle unexpected challenges in intensity, duration, or timing. Resilience includes preparation—mental or material—but doesn’t have to address specific threats; it can be broadly applicable, like in disaster responses. Flexibility also opens the door to reimagining how we live and work.
An attentive approach fosters empathy by addressing anxiety in ourselves and others, creating psychological safety. It’s about understanding others’ struggles while managing personal anxiety and trauma, which can either support or hinder trust-building. Open communication and a broader perspective are central to attentiveness.
The neural flexibility approach focuses on adapting to changes and improvising rather than sticking rigidly to plans. It emphasizes staying open to alternative strategies, especially in chaotic situations. Recognizing unexpected scenarios and abandoning pre-planned responses can be vital.
The interconnected approach values diverse collaboration across perspectives, cultures, and fields. It prioritizes variety over quantity, as small, unique teams often outperform larger, like-minded groups. Complex challenges are easier to tackle with multiple perspectives.
True to the BANI framework, the U.S. has shown it prioritizes its trade interests, friend or foe. America has been clear about its goals and strategies. It's time to rethink our Indian mindset. While advancing our services sector, we need to focus on creating world-class products. This will cut imports, boost exports, and reduce dependence on a few highly competitive markets. Change is never easy. In 1991, we faced far bigger challenges. Industries were heavily protected—Ambassador cars, Indian-made products, everything was shielded. We had no net worth and no reserves in the Reserve Bank. Yet, we opened up, grew stronger, and transformed. If Gen X could reshape India in 1991, there's no doubt Gen Y and Gen Z can achieve even more, building a brighter future for Gen Alpha and Gen Beta.
Another example of a BANI moment is IMF chief Kristalina Georgieva's blunt advice to investors on October 8, 2025: “Buckle up: uncertainty is the new normal and it is here to stay.” She noted that while the global economy was expected to slow “only slightly” this year and next, there were “worrying signs” that market shocks could soon test global resilience. Georgieva highlighted the soaring global demand for gold, with prices reaching $4,000 per ounce for the first time this week, as a sign of investor anxiety. She also pointed to the full impact of U.S. tariffs and the skyrocketing stock market valuations, fueled by AI-driven euphoria, as additional warning signals. “As for easy financial conditions — which are masking but not arresting some softening trends, including in job creation — history tells us this sentiment can turn abruptly,” she cautioned.