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FEBRUARY-MARCH 2025 WEJ #49

F INANCIAL MARKETS: TRENDS AND CHALLENGES OF 2025

WEJ AWARDS 2024 RECOGNIZING GLOBAL LEADERS

E CONOMIC AND GEOPOLITICAL EXPANSION OF BRICS WHEN MACHINES LEARN YOUR JOB

PERSON OF THE YEAR

DARON ACEMOĞLU «IT IS A WASTE FOR AI TO BE JUST FOCUSED ON AUTOMATION»

WORLD ORGANIZATION FOR DEVELOPMENT IS AN INTERNATIONAL NON-GOVERNMENTAL ORGANIZATION WITH SPECIAL CONSULTATIVE STATUS WITH UN ECOSOC, MEMBER OF THE UNITED NATIONS GLOBAL COMPACT

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[ INSIDE ]

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DARON ACEMOĞLU: «IT IS A WASTE FOR AI TO BE JUST FOCUSED ON AUTOMATION»

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FINANCIAL MARKETS: TRENDS AND CHALLENGES OF 2025

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ECONOMIC AND GEOPOLITICAL EXPANSION OF BRICS: PROSPECTS FOR NEW ENTRANTS

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[ MEGACITIES ]

[ SOCIETY ]

URBAN ECOSYSTEMS OF THE FUTURE: HOW TECHNOLOGY CREATES SUSTAINABLE INFRASTRUCTURE

WHEN MACHINES LEARN YOUR JOB: THE IMPACT OF AI ON FUTURE PROFESSIONS

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[ AWARDS ]

WEJ AWARDS 2024 | RECOGNIZING GLOBAL LEADERS 4

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ARTIFICIAL INTELLIGENCE AND ESG: HOW SUSTAINANET AITE IS TRANSFORMING SUSTAINABLE DEVELOPMENT 62

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Editor-in-Chief Robert Abdullah Editorial Team Judely Delva, Adneissa Christy Alezy, Teuvo Alonen, Stan Black, Robert Gubernatorov, Tana Harina, Kirungero, Sam Little, Anastasia Moore, Erfan Alam Serniabat, Anna Sokolidou, Anna Sokolova, Victoria Soll, Julico Swanidze, Bryce Vickmark Design by Gera Lu

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[ IN FOCUS ]

DARON ACEMOĞLU

«IT IS A WASTE FOR AI TO BE JUST FOCUSED ON AUTOMATION»

Daron Acemoğlu, a 2024 Nobel laureate in economics and Institute Professor of Economics at MIT, a leading researcher on the impact of technology and institutions on socio-economic development, in an interview with World Economic Journal Editor-in-Chief Robert Abdullah, shared his vision of the place and role of artificial intelligence in the development of mankind, the prospects for democracy, and a multipolar world.

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WEJ | February-March 2025

PHOTO: BRYCE VICKMARK

By Robert Abdullah Editor-in-Chief of World Economic Journal

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"I am very worried about the possibility that AI will increase the gaps between rich and poor (and middle-income) countries, partly because it will automate a lot of tasks in which middle-income countries specialize."

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[ IN FOCUS ]

F

irst, I'd like to congratulate you and your colleagues, Simon Johnson and James A. Robinson, on winning the Nobel Prize for your work on the formation and impact of institutions on prosperity. In light of your recent comments to the Nobel Committee about the threats to democracy posed by communication infrastructure and social media, I'm curious to know what technological advancements and development models could potentially reverse this trend and strengthen democracy, particularly in countries with weaker institutions.

Thank you very much. I’m not sure that we can bank on technological advancements to strengthen democracy. My view is that democratic institutions have to perform better in industrialized nations so that the trend of declining support for democracy is halted and people start having trust in democratic institutions again. This requires more shared prosperity (no group being left behind in the process of economic growth), high-quality public good provision, and better voice for people (so that large segments of the population should not feel excluded from the political process and debates).

In my opinion, much of the declining support for democracy in the United States and Europe is related to the breakdown of shared prosperity, failure of public goods

and service provision, and a perception that many people do not have an effective voice. Once democratic institutions start performing better in these countries, I think this will have a demonstration effect, and demand for democracy in nations with weaker institutions will also grow. Of course, at the same time, we have to worry about the use of AI and other tools for repression and surveillance in the hands of authoritarian governments, which will be another factor weakening democracy around the world.

In your work, you've highlighted how new digital technologies have negatively impacted workers, leading to job displacement and increased corporate power, “shifting the balance of power from labor to capital”. You've called for new approaches to technology and policy to ensure that workers benefit from technological advancements.

Could you elaborate on the specific policies and institutional reforms needed to mitigate the risks associated with new technologies?

My perspective is that technology is always malleable, so choices we make about the development and use of technology determine who wins and who loses from new advances.

Digital technologies have negatively impacted workers, because the tech sector and corporations have focused too much on automation.

"Much of the declining support for democracy in the United States and Europe is related to the breakdown of shared prosperity, failure of public goods and service provision, and a perception that many people do not have an effective voice."

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PHOTO: BRYCE VICKMARK

"Of course, at the same time, we have to worry about the use of AI and other tools for repression and surveillance in the hands of authoritarian governments, which will be another factor weakening democracy around the world."

I have argued that we should prioritize creating new tasks for workers using new technologies.

This can have much more empowering impact on labor and also reduce inequality. But such a redirection of technological change will not happen by itself. We need support for new technologies that are more pro-worker and also remove fiscal incentives that encourage too much automation (for example, the fact that there are much lower marginal taxes on capital than labor in the United States and other industrialized nations, which encourages excessive automation).

Having a strong labor movement can also help, especially if the leadership of the labor movement focuses on technology and finds strategies to encourage companies and managers to

use technology in a way that increases productivity but also helps workers.

In your 2019 article, 'The Wrong Kind of AI?', you noted that the introduction of AI primarily aimed at automating labor-intensive tasks typically leads to job losses, wage stagnation, and increased inequality.

However, you also observed that 'if AI is used to create new tasks and increase human capabilities, the benefits would be more likely shared with labor.' Given the rapid development of AI tools in recent years, what do you consider to be the most promising directions for using AI to create such new tasks?

What I explained above for technologies in general is doubly true for AI. AI is a very flexible technological plat9

[ IN FOCUS ]

form that can be used in many different ways. In my mind, it is a waste for AI to be just focused on automation, because it has the capability to be very useful for workers by increasing their expertise, by enabling them to perform more sophisticated and new tasks, and by improving their training.

For such a change to happen, the tech industry needs to change first.

The prioritization of automation is rooted in the business models and the ideology of the tech industry. As you point out, there is very rapid development of AI in recent years, but this is going very much in the direction of automating work and also using AI for manipulative purposes (for example,

op a common BRICS currency. In my mind, there is something much more important for many middle-income countries, including those in BRICS: to make sure that AI does not harm middle-income countries.

I am very worried about the possibility that AI will increase the gaps between rich and poor (and middle income) countries, partly because it will automate a lot of tasks in which middle-income countries specialize. Here, China’s and other BRICS countries’ priorities may differ.

China is a leading player in AI, and I’m not convinced that the direction of AI companies in China, like the direction of the AI companies in the

"It is a waste for AI to be just focused on automation, because it has the capability to be very useful for workers by increasing their expertise, by enabling them to perform more sophisticated and new tasks, and by improving their training" the attention economy and digital ads).

I don’t think this is the most productive use of AI, and the proper mix of regulation and encouragement for new uses of AI could break us out of this cycle.

The recent BRICS summit in Kazan was a significant global event.

Several leaders called for urgent reforms to the international financial architecture. For instance, Xi Jinping advocated for expanding the role and capabilities of the BRICS New Development Bank. The summit also discussed the potential for a common BRICS currency. In your view, what are the prospects for developing such economic instruments within the BRICS framework, and what timeline is realistic for their institutionalization?

I am not sure that the most important priority right now should be to devel10

WEJ | February-March 2025

United States, are particularly useful for middle-income countries.

Finally, we'd like to hear your thoughts on research into emerging markets, a key focus of the World Economic Journal. What are the most pressing topics in this field right now? Do you find our journal valuable, and what other issues should we explore in our publications?

I definitely believe that we need more research into emerging markets, and hence, World Economic Journal plays a very important role. The world is changing fast, and there is a danger that trends in AI, globalization, and geopolitics can adversely affect emerging markets. This is an important topic for research. We also need a more holistic understanding of how emerging markets can best adapt to technological changes.

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[ FINANCE ]

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FINANCIAL MARKETS:

TRENDS AND CHALLENGES OF 2025 The year 2024 was a watershed year for the global economy. According to the International Monetary Fund (IMF), global economic growth slowed to 2.5%. Developing economies grew by 3.2%, while developed economies grew by 1.8%. Major factors in the slowdown included high inflation and tighter monetary policy.

By Stan Black

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[ FINANCE ]

PREREQUISITES FOR FUTURE CHANGES

According to the International Monetary Fund (IMF), global economic growth slows to 2.5% in 2024, driven by rising rates and high inflation. In this environment, successful strategies will depend on the flexibility of markets and the ability to embrace innovation.

• Rate hikes and their consequences Central banks continued tightening policies in 2024, pushing average interest rates up to 4.5% in developed countries and 8% in emerging markets. This created significant obstacles for small and medium-sized businesses, limiting access to debt financing.

"Rate hikes are necessary to combat inflation, but their consequences make things more difficult for many companies, especially in highly indebted countries," said James Robertson, World Bank.

Main consequences: 1. Reduction in lending volumes: Small and medium-sized businesses, which are most dependent on borrowed funds, face difficulties in financing.

2. Growing debt burden: Companies with high debt loads experience increased debt servicing costs.

3. Decrease in investment: High rates limit investment activity in infrastructure and technology projects.

• The rise of digitalization The digitalization of financial systems continues to accelerate. One of the main trends is the introduction of central bank digital currencies (CBDC). Russia has completed a pilot project for a digital ruble, and China is actively developing its digital yuan, strengthening its position in the innovation market.1 14

WEJ | February-March 2025

Advantages: 1. Reducing transaction costs: Facilitating settlements between banks and companies.

2. Increase transparency: Increasing confidence in financial transactions.

3. Accelerate payments: Reduced processing time for international transactions.

ESG AND SUSTAINABLE DEVELOPMENT

According to Bloomberg, 50% of global funds have already integrated ESG criteria into their strategies, which ensures the stability of their assets even in conditions of market volatility. This share could rise to 60% in 2025, thanks to tighter regulations in Europe and increased investment in low-carbon projects.

“Companies that embrace ESG gain a competitive advantage in the long term,” says Julia Hunter, analyst at MSCI.

TRENDS 2025: IMPACT OF CENTRAL BANK RATE HIKE

In recent years, central banks around the world have been aggressively raising key interest rates in an effort to combat inflation. This process has had a significant impact on the global economy, changing investor behavior and lending conditions. According to the International Monetary Fund (IMF), in 2024 the average interest rate in developed countries reached 4.5%, which is the highest value in the last two decades.

By 2025 expected, that central banks will continue to keep rates high to control inflation. However, this could lead to a decline in investment activity and a slowdown in economic growth.

• Impact on the global economy Higher interest rates lead to higher lending costs, which in turn reduces spending by companies and households. According to Bloomberg, in 2024, corporate borrowing fell by 15% compared to the previous year.

This limits opportunities for business development and job creation.

"High rates are necessary to contain inflation, but they must be balanced with support for economic growth," said Christine Lagarde, president of the ECB.

KEY MACROECONOMIC INDICATORS (2024) Developed markets

Emerging Markets

8.2% 6.5% 4.5% 3.5%

3.1% 1.8%

Average rate

Inflation

• Risks and challenges for developing countries Rising rates pose a particular threat to developing economies. According to a World Bank study, rising borrowing costs are increasing the debt burden, making it difficult to finance infrastructure projects and social programs. In Nigeria, for example, the cost of public debt servicing increased by 30% in 2024.

At the same time, higher rates help strengthen national currencies against the US dollar, which positively affects

Growth Forecast CB Insights

1

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imports. However, this benefit is often offset by a reduction in foreign direct investment flows, as investors prefer markets with higher returns.

KEY RATES: CURRENT DATA AND FORECASTS 4,5

Rate in 2024 (%)

"A longer period of high interest rates is creating difficulties for borrowers, especially in developing countries. Combining monetary measures with policies aimed at stimulating investment is critical" — Tobias Adrian, Senior Economist, IMF. For many developing countries, such as India and Brazil, finding alternative sources of financing is becoming a key focus. Government bonds denominated in local currencies are becoming increasingly popular due to their reduced exposure to dollar fluctuations.

• Forecasts for 2025 Experts predict that in 2025, key rates will begin to decline gradually, especially in developed countries. Reducing inflation to target levels (around 2%) will be the main driver of easing monetary policy. However, rates may remain high in developing countries due to pressure on national currencies.

For businesses and investors, this means adapting to a high cost of capital environment. Companies will be forced to optimize their operating costs and seek new sources of financing, including green bonds and private equity.

TRENDS FOR 2025: GROWING ROLE OF ESG INVESTING

In recent years, the concept of ESG (environmental, social responsibility, and corporate governance) has become central to the strategies of investors around the world. According to MSCI, the volume of assets under management that meet ESG criteria will reach US$50 trillion in 2024 and continue to grow. Growing interest in ESG investing is due not only to ethical considerations but also

Forecast for 2025 (%)

4,2 3,5

3,2

3,1

0,5 USA

Eurozone

3

0,8

Japan

China

DISTRIBUTION OF ESG FUNDS BY SECTOR (2024) 35.0

Percentage of total (%)

Investment volume

25.0 20.0

17.5

15.0

12.5

Technology

Energy

10.0

Finance

to the proven stability of such assets in conditions of market volatility.

By 2025, it is expected that ESG will become the standard in investment management, thanks to increased regulation, higher investor expectations, and increased awareness among companies of the importance of sustainability. However, with this growth come challenges, such as the problem of greenwashing and the lack of globally accepted ESG assessment standards.

• ESG as a Market Driving Force ESG criteria are becoming an important factor in investment

7.5

Consumer Goods

5.0

2.5

Other Sectors

decisions. Investors increasingly evaluate companies not only on financial indicators but also on their environmental impact, social responsibility, and the quality of corporate governance. According to Bloomberg, in 2024, 40% of global funds took into account ESG criteria in their strategies.

“ESG is becoming not just a trend but a necessity for companies looking to raise capital. Investors are demanding transparency and real action on sustainability,” says Julia Hunter, analyst at MSCI. 15

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CHALLENGES AND PROSPECTS OF ESG INVESTMENTS

Despite their growing popularity, ESG investing faces a number of challenges. The main one is the problem of “greenwashing,” where companies artificially inflate their sustainability achievements. According to a study by the European Commission, in 2024, more than 30% of companies' ESG reports contained unsubstantiated data.

“Only companies that can demonstrate their commitment to ESG principles through real actions, not just declarations, will be able to maintain investor confidence,” says Carlos Rivera, consultant European Commission.

In 2025, the introduction of new international standards is expected, which will unify the approach to ESG assessment and reduce the level of greenwashing.

For investors, ESG remains one of the most promising areas. Companies that integrate sustainable development into their strategy become more attractive for investment. At the same time, the importance of competent regulation of the ESG market and the implementation of international assessment standards cannot be overestimated.

Investors should pay attention to the quality of companies' ESG reporting and avoid greenwashing. In 2025, low-carbon technologies and projects aimed at social development will become the main priorities of ESG investments.

KEY CHALLENGES: RISK MANAGEMENT AND COMMODITY MARKET VOLATILITY

The year 2025 will bring many challenges for the global economy, with risk management remaining a key priority. Global instability is increasing due to geopolitical tensions, climate 16

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KEY CHANGES IN COMMODITY MARKETS (2024) Product

Price increase/decrease

Cause

Oil Gas

-10% +15%

Demand declines in Europe Demand growth in Asia

Copper

+20%

Increase in EV production

change, the effects of the pandemic, and inflation waves. According to the Bank for International Settlements (BIS), the global debt stock will reach $305 trillion in 2024, posing new challenges for corporations and financial institutions.

Example: Financial risks Large corporations such as Volkswagen and Toyota are adapting to volatility through hedging strategies. In 2024, automakers actively used futures contracts to protect against rising metal prices.

Example: Technological risks Digitalization of the economy also creates new challenges According to KPMG, 68% of CEOs in large companies fear cyber threats as a factor of destabilization.

In response, banks such as HSBC have begun to implement artificial intelligence to monitor and prevent fraud.

Commodity Market Volatility Commodity markets remain extremely volatile due to various factors, including the energy transition, geopolitical conflicts, and economic recovery from the pandemic. For example, in 2024, the price of oil varied between $70 and $85 per barrel, which created difficulties for energy companies.

Example: Energy Transition According to the International Energy Agency IEA, increasing investment in renewable energy is reducing long-term demand for hydrocarbons. However, the transition period is accompanied by instability as countries seek a balance between traditional and new energy sources.

Expert of World Bank John Smith comments: "Commodities play a central role in the energy transition, and their volatility affects the cost of green economy projects."

KEY CHALLENGES: LIQUIDITY ISSUES IN EMERGING MARKETS

Let's take a closer look at the risks associated with emerging markets.

• Key Liquidity Challenges The International Monetary Fund (IMF) reports emerging markets continue to face severe liquidity challenges.

Net capital outflows in 2024 were $1.2 trillion, the highest in two decades. Rising interest rates in developed countries and a stronger US dollar were the main drivers of the outflow.

• Causes of the problem: 1. R ising interest rates: The US Federal Reserve's policies have pushed up Treasury yields, making them more attractive to investors than emerging market assets.

2. Debt burden: According to Bloomberg, about 45% of developing countries' public debt is denominated in dollars. A stronger dollar increases the cost of servicing the debt.

3. L ack of domestic investment: In 2024, according to the World Bank, for example, the share of domestic investment in Latin American economies fell by 7%.

• Regional differences Liquidity problems vary across regions.

For example, Latin American countries face high debt servicing costs, while Southeast Asian countries suffer from a lack of foreign investment in infrastruc-

WORLD ECONOMIC JOURNAL

ture. In Africa, for example, the liquidity crunch is exacerbated by poor access to international capital markets. According to Fitch, international bond issuance in the region fell by 20% in 2024.

• Impact on the economy Liquidity problems are slowing economic growth. Inflation in African countries has reached 11%, which limits purchasing power. At the same time, Latin American countries have been forced to raise key rates to 10%, which limits access to credit for businesses.

Example: Financial Crisis in Argentina In 2024, Argentina found itself in another debt crisis. According to the IMF, inflation reached 120%, forcing the country to seek additional financial assistance.

Economist James Carter of Bloomberg emphasizes: "Liquidity crises in emerging markets are becoming a catalyst for global financial turmoil. Global institutions need to support these countries."

Recommendations for solving the problem To improve liquidity, experts recommend the following measures: 1. Developing domestic capital markets. Increasing local borrowing could reduce reliance on dollar debt.

2. Diversification of funding sources. Increasing the share of local currency bonds will increase sustainability.

3. Cooperation with international institutions. Reforms supported by the IMF and World Bank, can ease the pressure on countries' budgets.

INNOVATION AND NEW OPPORTUNITIES: APPLICATION OF AI AND MACHINE LEARNING TECHNOLOGIES

Artificial intelligence (AI) and machine learning (ML) have revolutionized industries, unlocking innovative solutions and creating opportunities

LIQUIDITY RATIOS BY REGION (2024)

Debt as a share of GDP

70% 60% 50% 40% 30% 20% 10% 0

Latin America

Southeast Asia

Africa

LIQUIDITY RATIOS BY REGION (2024) Debt rate

10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5%

Latin America

Southeast Asia

Africa

across various sectors. These technologies improve efficiency, streamline decision-making, and drive growth by leveraging data in unprecedented ways.

Below, we explore the transformative applications of AI and ML and their impact on businesses and individuals.

• AI technologies and their place in the financial sector In 2025, artificial intelligence (AI) and machine learning (ML) will continue

to play a key role in transforming the financial sector; according to a consulting firm, McKinsey, 70% of global financial institutions are already using AI to automate processes and improve forecast accuracy. These technologies have become tools for optimizing operations, managing risks, and improving security.

• AI in Risk Management Financial institutions are actively using AI to analyze their clients' creditworthiness. Banks such as HSBC and Citi implemented machine learning algorithms to assess borrowers' risks, which reduced the level of non-performing loans by 20%. At the same time, AI helps to identify fraudulent transactions. Thus, in 2024, anomaly recognition algorithms helped prevent fraud worth $500 million in the United States.

• Automation of financial analysis AI enables the processing of vast amounts of data in real-time, making financial analysis faster and more accurate. Algorithms can analyze market trends, evaluate assets, and predict price changes.

Example: Robo-advisors Investment platforms, such as Betterment and Wealthfront, use robo-advisors to manage client portfolios. These systems analyze investor preferences and market data to optimize investments. In 2024, the robo-advisor market grew by 25%, reaching $1.5 trillion in assets under management.

• AI in financial market forecasting One of the most promising areas is using AI to predict market trends. Investment funds such as BlackRock are implementing ML to analyze macroeconomic data, corporate reports, and news, allowing them to predict asset price changes.

• The Future of AI in Finance Gartner predicts that by 2030, AI will be a determining factor in decision-making for most financial companies. The technology promises personalized 17

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EXAMPLES OF USING AI IN MARKET FORECASTING Company

Technology

BlackRock JP Morgan Fidelity

Macro data analysis AI bot for trading News Recognition

financial services, using AI to develop products considering individual customer needs, cost reduction, and full operations automation, such as loan processing or insurance claims.

Digital payments expert Jane Doe of the World Bank noted: "Fintech has an important role to play in increasing financial inclusion, especially in developing economies."

INNOVATIONS AND NEW OPPORTUNITIES: DEVELOPMENT OF FINTECH SERVICES

• Main directions of fintech development 1. Digital payments. Payment platforms like Stripe and Square make international transactions more accessible. In 2024, the volume of cross-border payments through fintech platforms grew by 25%, according to McKinsey.

2. Mobile banking. Banking apps are replacing traditional branches.

Companies like Chime and Monzo offer digital banking services, including lending and savings management.

3. Digital lending: Platforms like LendingClub use AI algorithms to analyze borrowers’ creditworthiness, speeding up the approval process and making loans more accessible.

The rise of fintech services has ushered in a new era of innovation, changing how financial transactions are conducted and managed. From seamless digital payments to personalized financial planning tools, fintech is breaking down barriers and creating opportunities for businesses and consumers alike. Below, we look at cutting-edge advancements in fintech and their transformative impact on the global economy.

• The Role of Fintech in Transforming the Financial Sector Fintech services continue to transform the financial industry by providing new solutions for users.

According to CB Insights, the volume of investments in fintech in 2024 exceeded $200 billion, 30% more than the previous year. Companies like PayPal and Revolut set the standard for digital payments, personal finance management, and lending.

Example: Fintech expansion in developing countries In India, the UPI (Unified Payments Interface) platform has seen digital transactions grow by 40% in 2024, allowing small businesses to cut costs and attract new customers.

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• The Impact of Fintech on Customers Fintech services significantly increase the availability of financial services for various categories of the population. For example, in African countries, mobile payment platforms such as M-Pesa provide access to banking services to more than 50 million users who previously did not have a bank account.

Expert McKinsey John Smith comments: "Fintech services are lowering the barriers to entry and making financial services accessible even to those who have never used traditional banks."

Result Increased forecast accuracy by 30% Increasing portfolio returns Quick response to market events

• The Future of Fintech The fintech sector is expected to grow by adopting artificial intelligence and blockchain technologies. Statista predicts that the fintech services market will reach $500 billion by 2030.

Key trends of the future: • AI integration, expense forecasting, budget automation, asset tokenization, and the creation of digital tokens for real estate and stock investments.

• Partnership with traditional banks.

Fintech companies are increasingly collaborating with banks to develop joint products.

INNOVATION AND OPPORTUNITIES: DECENTRALIZED FINANCE (DEFI)

Decentralized finance (DeFi) is revolutionizing the financial landscape by eliminating intermediaries and enabling direct peer-to-peer transactions using blockchain technology.

This innovative approach opens up new opportunities for financial inclusion, transparency, and accessibility while disrupting traditional banking systems. Below, we look at the key innovations in DeFi and the huge potential they hold to change the future of finance.

• Concept and Basic Principles of DeFi Decentralized finance (DeFi) is an ecosystem of financial services built on the blockchain. Unlike the traditional system, DeFi eliminates intermediaries such as banks and brokers, giving users direct access

WORLD ECONOMIC JOURNAL

Key benefits of DeFi include: 1. Transparency. All transactions are recorded in the blockchain and are available for verification.

2. G lobal availability. Anyone with access to the Internet can use financial services.

3. Flexibility. The ability to automate complex financial transactions thanks to smart contracts.

Examples of DeFi Protocols DeFi protocols offer a wide range of services, from cryptocurrency exchange to lending. Let's look at the most popular platforms.

1. Uniswap— a decentralized exchange (DEX) where users can exchange tokens without the involvement of centralized operators.

2. Aave— a platform for decentralized lending that allows you to earn interest on deposits and receive loans secured by collateral.

3. MakerDAO— a protocol that enables the issuance of stablecoins, such as DAI, pegged to fiat currencies.

• Risks and Challenges of DeFi Despite the benefits, DeFi faces a number of challenges: 1. S ecurity risks. Smart contracts can contain vulnerabilities that are exploited by hackers. In 2024, the damage from hacks amounted to $2 billion.

2. Regulatory uncertainties. The lack of a clear legal framework is holding back the adoption of DeFi into the traditional financial system.

3. High volatility. Sharp fluctuations in crypto asset prices can lead to significant losses for users.

KEY FINTECH SEGMENTS AND THEIR GROWTH IN 2024 Transaction volume growth and company examples

25%

25%

20%

20%

18%

15% 10% 5% 0%

PayPal Digital Revolut Mobile Payments Banking

Digital lending

TVL VOLUME (2024).

MAIN DEFI PROTOCOLS AND THEIR FUNCTIONS 50

40

$ billion

to financial transactions through smart contracts. According to DeFi Pulse, the volume of assets locked (TVL) in DeFi protocols reached $250 billion in 2024, an increase of 30% compared to the previous year.

30

20

10 0

Uniswap

Aave

MakerDAO

Decentralized token exchange Lending and loans Issue of stablecoins

• The Future of DeFi According to Messari, the volume of assets locked in DeFi is expected to reach $1 trillion by 2030.

The main areas of development will be: 1. I ntegration with traditional finance. Banks will start using smart contracts to automate financial transactions.

2. Tokenization of assets. Real assets, such as real estate or art, will be digitized to make investment easier.

3. Scaling. Technological improvements such as the move to second-layer blockchains will increase the speed and reduce the cost of transactions.

RECOMMENDATIONS AND PROSPECTS: FORECASTS FOR 2025

Looking ahead to 2025, industry experts provide predictions and advice on navigating the ever-changing technology and business landscape. These insights provide insight into emerging trends, potential challenges, and growth opportunities across sectors.

Below, we explore key predictions and strategies to capitalize on the opportunities that lie ahead.

• Forecasts for 2025: Key Macroeconomic Factors The 2025 economy will continue to adapt to new challenges, including the impact of the pandemic, changes in commodity markets, and the need for accelerated technology adoption; according to the International Monetary Fund (IMF), global growth will be 3.5%, with emerging markets (4.8%) outperforming developed economies (2.2%).

“Emerging economies will account for almost two-thirds of global economic growth in 2025, underscoring their growing importance in the global economy,” says John Marsh, analyst at the World Bank.

19

[ FINANCE ]

Growth factors 1. Investments in green energy The environmental agenda is becoming a priority for most countries and companies. According to Bloomberg, investments in renewable energy projects will grow by 25%, which is associated with the acceleration of the transition to carbon neutrality. For example, in Europe, 60% of new energy projects are focused on solar and wind energy.

2. Technological transformation The use of technologies such as artificial intelligence (AI) and blockchain will continue to grow.

Financial sector companies such as HSBC are actively implementing AI to minimize operational risks.

McKinsey predicts that up to 50% of all large organizations will integrate blockchain into their processes by 2025.

Challenges 1. Regulatory uncertainty The lack of global standards for digital assets remains a significant obstacle for companies, according to the European Commission.

“Only countries that have implemented transparent regulatory mechanisms will be able to fully realize the potential of digital assets,” says Carlos Rivera, consultant European Commission.

2. Volatility in commodity markets Global commodity prices remain highly volatile. For example, copper prices are set to rise by 20% in 2024 due to increased demand from electric vehicle manufacturers.

Analysts at the World Bank emphasize: “The energy transition will inevitably lead to higher prices for metals such as lithium and nickel, which creates new challenges for the energy sector.”

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WEJ | February-March 2025

RESULTS

Growing volatility and the need to adapt to environmental and technological agendas create both risks and opportunities for market participants. Countries and companies that are able to quickly respond to changes will take the lead.

2024 has become a year of transformational changes for the global economy and financial markets. An analysis of the key trends presented in the article allows us to highlight several key conclusions and proposals.

1. T ightening of monetary policy and its consequences Central banks worldwide have been forced to keep interest rates high to combat inflation. This has significantly limited access to credit for companies and individuals, reduced investment activity, and increased debt burdens, especially in developing countries. To mitigate the impact, developing economies should seek alternative sources of financing, including government bonds denominated in domestic currencies.

2. D igitalization as a driver of change: The introduction of central bank digital currencies and the growth of fintech services have opened new opportunities to simplify financial transactions and reduce transaction costs. However, according to CB Insights, further development of the regulatory framework and international cooperation are necessary for the successful scaling of these technologies.

3. E SG investing is becoming the standard: Companies integrating ESG criteria into their strategy are already gaining competitive advantages.

However, the growing popularity of ESG requires the introduction of in-

ternational assessment standards to combat the problem of “greenwashing” by the European Commission.

4. The role of innovation in financial inclusion: Fintech products such as mobile payments and digital lending play an important role in expanding financial inclusion, especially in developing countries. These technologies have the potential to reduce barriers to entry for underbanked populations significantly.

5. Decentralized Finance (DeFi): DeFi offers solutions that could change the global financial architecture. Transparency, global accessibility, and flexibility make these technologies promising, but they face security and regulatory challenges.

RECOMMENDATIONS

International financial institutions, such as the IMF and World Bank, support developing countries through technical assistance, and funding programs should be increased. Governments need to strengthen cooperation with fintech companies, creating conditions for innovation and ensuring fair regulation. Investors need to evaluate companies' ESG reporting in light of new standards, avoiding "greenwashing." Market participants should take advantage of DeFi opportunities while ensuring a robust regulatory framework to minimize risks.

The global economy in 2025 faces a choice: seize the opportunities of digitalization, DeFi, and ESG initiatives, or risk missing out on sustainable development. Those companies and countries that adapt to the new conditions will be able to overcome current challenges and take a leading position in the global economy.

RESEARCH The analytical rating service WOD-Research regularly calculates ratings, indices; conduct analytical studies in the sustainable development of the world’s states and territorial entities of the countries, as well as international corporations

WOD-RESEARCH

IS THE SCIENTIFIC BASIS FOR DEVELOPING THE FOLLOWING TOOLS OF THE GLOBAL INITIATIVE #SDGAction33410, RECOGNIZED BY UN SDG GOOD PRACTICES: 1. Artificial Intelligence for the Development of Territorial Entities (AITE) 2. The Statistical Committee #SDGAction33410 3. Initiative to establish the United Nations Programme for Territorial Development

[ ANALYTICS ]

ECONOMIC AND GEOPOLITICAL EXPANSION OF BRICS:

PROSPECTS FOR NEW ENTRANTS

By Anna Sokolidou

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WEJ | February-March 2025

WORLD ECONOMIC JOURNAL

23

[ ANALYTICS ]

GROSS DOMESTIC PRODUCT (GDP) ANNUAL GROWTH (%) EU-27 2007: 3.4 %, 2023: 0.6 %

15%

China

Brazil

Ethiopia

Egypt

10%

India

Iran

South Africa

Russia

UAE

7.2% 5.2%

5%

4.7%

3.6%

3.8%

2.9%

3.4%

0.6%

0% -5% 2007 2023

2007 2023

2007 2023

2007 2023

B

RICS is an informal intergovernmental organization of developing economies aiming to counterbalance the influence of Western-dominated institutions such as the International Monetary Fund (IMF) and the World Bank. The acronym BRICS stands for Brazil, Russia, India, China, and South Africa, the five initial members forming the geopolitical bloc. It was established

2007 2023

2007 2023

in 2009. Since then, more countries, including Egypt, Ethiopia, Iran, and the United Arab Emirates, have joined. Saudi Arabia’s membership is pending confirmation. The bloc seeks to coordinate its members’ economic and diplomatic policies, establish new financial institutions, and decrease reliance on the US dollar. Despite having diverse interests, BRICS members have common values and targets, including but not limited to the following:

2007 2023

2007 2023

2007 2023

• Improving their economic indicators; • Opposing non-UN-sanctions; • Pushing for reforms in global institutions, such as changing the UN Security Council and global financial institutions, including the World Bank and IMF. Below I have prepared a summary of the BRICS members’ key economic indicators. It is based on the European Parliament’s data.

GDP PER CAPITA (PURCHASING POWER PARITY, INTERNATIONAL DOLLARS, 1000S)

International dollars, 1000s

EU-27 2007: 32.8, 2023: 57.0

Brazil

Egypt

China

India

Iran

Russia

South Africa

50

UAE 92.1

100

20

17.0

23.3

3.8

0 2007 2023

2007 2023

2007 2023

Source: European Parliament

24

Ethiopia

WEJ | February-March 2025

2007 2023

9.3 2007 2023

20.3 2007 2023

35.4 2007 2023

16.1 2007 2023

2007 2023

WORLD ECONOMIC JOURNAL

Overall, most BRICS+ countries have higher economic growth rates than developed economies, most notably the EU. For example, as of 2023, the EU’s growth rate totaled 0.6%. It is so low that we can talk of stagnation. The growth rates of Brazil, China, India, and even Russia and Iran (despite the sanctions) have totaled 2.9%, 5.2%, 7.8%, 3.6%, and 4.7%, respectively.

The EU’s GDP per capita adjusted for purchasing power parity, however, as of 2023, was USD 57,000, substantially higher than most BRICS countries, excluding the UAE, suggesting a much higher standard of living in Europe.

The EU’s unemployment rate of 6.1% as of 2022 is also lower than some BRICS+ countries’. This is especially true of South Africa's 28.8%, Brazil’s 9.2%, and Iran’s 8.8% unemployment rates.

Most BRICS+ countries have recorded budget deficits just like the EU. However, the EU’s 3.5% budget deficit is even higher than the indicators of Ethiopia, Iran, and Russia.

Also quite important is the fact that many BRICS+ countries are less leveraged than the European Union.

Russia, the UAE, Iran, Ethiopia, South Africa and even India are less leveraged than the EU. In other words, the EU’s debt-to-GDP indicator is worse than many developing countries’.

Most BRICS countries’ foreign direct investments (FDIs), ownership stakes in foreign companies or projects made by investors, companies, or governments from other countries, are higher than the EU’s. For example, Brazil's (3.9%), China’s (1.0%), Egypt’s (2.4%%) and Ethiopia’s (2.9%) FDI net inflows as % of GDP, all of these are higher than the EU’s indicator of just 0.9%.

Even some BRICS countries’ inflation indicators are lower than the EU’s 2023 inflation figure of 6.3%.

Among these low-inflation countries are China, the UAE, Brazil, India, and South Africa. However, a num-

TOTAL UNEMPLOYMENT RATE TOTAL, % OF LABOUR FORCE EU-27 2007: 7.5%, 2023: 6.1%

Brazil

9.3%

9.2%

China

4.4 %

5.0%

Egypt

8.8%

6.4 %

Ethiopia

2.3%

3.4%

India

8.5%

4.8%

Iran

10.8%

8.8 %

Russia

6.0%

3.9%

South Africa

19.3%

28.8%

2.9%

3.0%

2007

2024

UAE Source: European Parliament

BUDGET SURPLUS/DEFICIT (% OF GDP) EU-27 2007: -0.5%, 2023: -3.5%

Brazil

20% 10%

China

0% -10%

Ethiopia

20% 10% 0% -10%

-7.9%

Egypt

-7.1%

India

-2.5% Russia

South Africa

Iran

-5.8%

-2.3%

-8.6%

UAE

20% 10%

-6.3%

0% -10%

-2.3% 2007

2023

-6.0% 2007

2023

2007

2023

Source: European Parliament

25

[ ANALYTICS ]

PUBLIC FINANCES, MONETARY AND FINANCIAL DATA PUBLIC GROSS DEBT (% OF GDP)

ber of BRICS+ countries with high inflation, including Egypt (24.4%), Ethiopia (30.2%), and Iran (41.5%) have several times higher inflation indicators than the EU. Overall, we can say that compared to BRICS+ members, the EU’s economy is stagnating. In other words, its growth rate is anemic.

EU-27 2007: 62.2 %, 2023: 83.3 % Brazil 84.7 %

100%

Egypt 95.9 %

China 83.6 %

50%

ECONOMIC SIGNIFICANCE OF BRICS+

0% Ethiopia 38.0 %

100%

India 82.7 %

Iran 28.3 %

South Africa 73.9 %

UAE 30.9 %

50% 0%

Estimation

Russia 19.7 %

100% 50% 0%

2007

2023

2007

2023

2007

2023

INFLATION EU-27 2007: 2.4 %, 2023: 6.3 % Brazil

50% 40% 30% 20% 10% 0%

4.6%

0.2%

Ethiopia

India

Iran

30.2%

41.5%

5.4% Russia

South Africa

5.9% 2007

2023

UAE

4.6%

5.9% 2007

Source: European Parliament

26

Egypt 24.4%

50% 40% 30% 20% 10% 0% 50% 40% 30% 20% 10% 0% -5%

China

WEJ | February-March 2025

2023

2007

2023

Thanks to the organization’s 2024 expansion, the geopolitical, economic and demographic significance of BRICS+ is growing. The BRICS+ members currently account for 35% of the global economy, based on the purchasing power parity indicator.

As can be seen from the graph on the next page, the G7 share of the world’s GDP has been declining for a few decades. In 1995 the G7 accounted for 45% of the world’s GDP, while in 2022 it was just 30%. BRICS+ countries’ share has substantially increased over the same period.

According to Ahmed Moustafa, director of the Asia Center for Studies and Translation in Egypt, by 2030, the BRICS countries will raise their share in the world’s GDP to more than 50%, thus allowing them to aim for more resources and decision-making power in global intergovernmental organizations. However, concerning the alliance’s desire to influence the World Bank and the IMF, the BRICS+ merely created an alternative, namely the NDB (New Development Bank), in 2014 because, in the group’s opinion, neither the IMF nor the World Bank, Western-led financial institutions, sufficiently reflect its interests.

The rising power of BRICS+ will also likely enable the foundation of new international financial organizations, similar to the NDB and the CRA (The BRICS Contingent Reserve Arrangement), facilitating financing and economic stability for emerging countries.

The BRICS founded the NDB in 2014 to facilitate emerging nations’ development.

WORLD ECONOMIC JOURNAL

PHOTO: PELOTAS MUN

The NDB was established as a competitor and a counterforce to the World Bank and International Monetary Fund (IMF), of which many BRICS members are skeptical. The establishment of the NDB is considered to be one of the BRICS’ most important achievements. The New Development Bank finances infrastructure development, clean energy, environmental protection, and the construction of cyberinfrastructure in BRICS countries. The financial institution funded a considerable number of projects, including India's urban rail and Brazil's wind power complexes. The NDB bank has cumulatively approved loans worth 35 billion USD for a total of more than 100 projects since its establishment.

However, the key way of cooperating between the BRICS+ nations remains trade.

As can be seen from the two diagrams on the next page, which show BRICS+ imports and exports, trade within the bloc grew between 2015 and 2022. The trade between the core BRICS members is in blue. Trade with other nations, including the US, the EU, and other developed markets (DM), has become slightly less significant for the BRICS because their shares have somewhat decreased.

According to the State Council of the People’s Republic of China, China's foreign trade with other BRICS members totaled 4.62 trillion yuan or 648 billion USD, in the first nine months of 2024, a 5.1% year-on-year rise.

This rise can be attributed to the free trade agreements signed between China and other BRICS countries.

Here are the best-performing sectors: • China's exports of steel and textile raw materials to other BRICS nations increased by 8.6% and 13.4% year on year in the first nine months of 2024.

• During the same time period, Chinese exports of intermediate products, including integrated circuits, tablet display modules, and airplane parts, to fellow BRICS nations achieved dou-

CHANGE IN WORLD GDP SHARES OF THE G7, BRICS AND BRICS+, AT PURCHASING POWER PARITY (%) 50

36%

BRICS+’s share of world GDP in 2022 at purchasing power parity

45 40 35

86%

30

China’s share of global production of heavy rare earth elements in 2021

25 20 15

25%

10

BRICS+’s share of global exports in 2021

5 0

1995 1997 1999 2001 2003 2005 2007 2009

G7

BRICS

2011 2013 2015 2017 2019 2021

BRICS+

Note: BRICS comprises the following countries: Brazil, Russia, India, China and South Africa. BRICS+ also comprises Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates.

Sources: International Monetary Fund; Banque de France calculations

ble-digit growth, enabling other BRICS countries to support their emerging industries.

• Trade in agricultural products has also been sound. In the first nine months, more than 80% of poultry and frozen pollack and more than 50% of crabs imported by China were from BRICS countries.

However, trade is not the only way for BRICS+ members to cooperate.

During the 14th BRICS Economic and Foreign Trade Ministers' Meeting in Moscow in 2024, the participating countries agreed to cooperate in global value chains, digital technologies, special economic zones, green production, electronic documentation, and electronic commerce. The participants also decided to strengthen cooperation in policy exchanges, capacity building, and best practice sharing.

According to Liu Ying, a researcher with the Chongyang Institute for Financial Studies, Renmin University of China, BRICS countries can benefit from their absolute advantages by improving economic and trade contacts.

“…the absence of rules, norms, and procedures challenges BRICS in moments like its expansion. How can one analyze and justify the selection of six new members without a formal framework to guide the decision? The choice of some over others can create diplomatic constraints for BRICS, both individually and collectively, in the face of the high interest demonstrated in recent months.”

William Daldegan is a professor at the Federal University of Pelotas (UFPel), an international relations graduate with a postgraduate program in political science, and the leader of the Research Group on Economics, Politics, and International Development in Brazil.

27

[ ANALYTICS ]

NEW BRICS MEMEBERS' IMPORTS

15%

2015

7%

7%

9%

13% 38%

13%

2021

12%

41%

2022

12%

38%

Euro area USA

15%

Other DM

23%

27%

Core BRICS

30%

Other EM

NEW BRICS MEMEBERS' EXPORTS 7%

26%

5%

2015

8% 36%

21%

4%

2021

4%

15% 38%

23%

2022

37%

Euro area USA Other DM

25%

29%

28%

Core BRICS Other EM

Moreover, the BRICS can become an important force in fighting trade protectionism. As BRICS members, countries can improve their economic growth rates.

GEOPOLITICAL SIGNIFICANCE AND EXPANSION OF BRICS+

“There is some risk that expansion will cause BRICS to become incoherent, but New Delhi will find in 2024 and beyond that it has new opportunities to engage with partners such as Saudi Arabia and the UAE and strengthen engagement in the Global South more broadly, particularly with Ethiopia and South Africa.”

Viraj Solanki is a research associate for South and Central Asian Defence, Strategy, and Diplomacy at the International Institute for Strategic Studies.

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WEJ | February-March 2025

Another question the bloc’s members have to agree on is whether to grow its membership. China and Russia have so far been in favor of expansion. Brazil and India, in contrast, have been more reluctant due to concerns that it would make them less influential members of the organization.

Egypt and Ethiopia's admission to the bloc will strengthen Africa’s voice in the bloc. Egypt also has close economic ties with China and India, as well as political relations with Russia. Being a BRICS member can help Egypt secure more funding to support its shattered economy.

Due to the fact that Saudi Arabia and the UAE are now the bloc’s members, the alliance now has two significant economies in the Arab world and the Middle East in general. They are also the world’s significant oil importers. Another source of questions is the bloc’s relations with the G7 countries.

Iran and Russia strongly oppose the US dominance. China, in turn, is a strong economic competitor of the US. Also, it is worth noting the US-China tensions around Taiwan. However, Brazil, India, and South Africa have warmer relations with the US. Moreover, Saudi Arabia and the UAE have been the US's close allies in the Middle East.

But how has the collective West reacted to the BRICS’ expansion? In short, Western countries have not taken the bloc’s growth seriously.

For example, White House National Security Advisor Jake Sullivan said that the US does not consider BRICS a geopolitical adversary. The only US official

PHOTO: IISS

Source: Research Gate

WORLD ECONOMIC JOURNAL

ADVANTAGES AND RISKS OF BRICS+ EXPANSION

So, what are the main advantages and disadvantages of the BRICS+ expansion, and how can the growing bloc affect the world order?

In short, BRICS+ could make a substantial global impact in the following five areas.

1. First, it is energy because BRICS+ unites some of the world’s biggest energy exporters and importers. Thanks to the fact that Iran, Saudi Arabia, and the UAE are the bloc’s new members, 32% of world output of natural gas and 43% of crude are due to oil BRICS+ member states. These numbers will only rise if Kazakhstan, Kuwait, and Bahrain get admitted to the alliance. 38% of the world’s petroleum imports are also due

THE LARGEST EXPORTING NATION FROM THE BRICS+ BLOC IS CHINA 4,000

3,000

CDP in billion US dollars

to have publicly reacted negatively to the BRICS expansion was Donald Trump. I will explain the reaction of the newly elected president later in this analysis. Likewise, Annalena Baerbock, the German Foreign Minister, says Germany has no reason to worry about BRICS’ expansion. According to many political experts, the bloc’s ambitions are exaggerated because the members have numerous domestic problems and cannot be a real threat to the West.

In the meantime, it is worth pointing out that the USD can quickly lose its status as the world’s reserve currency and as a medium of exchange in global trade. The brilliant position of the USD is due to the Treaty of Bretton Woods. This agreement, signed during World War II, proclaimed the dollar the world’s reserve currency. That is why the demand for the USD has remained very high from foreign countries and has therefore allowed the US Federal Reserve to print more dollars to finance the mounting US national debt while keeping inflation levels at a reasonable level. That is why ignoring BRICS as a major economic and political force “is no longer an option,” said Tufts University scholars in 2023.

2,000 1,000

0

2001

China

2003

2005

Russia

2007

India

2009

Brazile

2011

2013

2015

2017

2019

2023

2021

South Africa

Source: Research Gate

to BRICS+ countries. The top petroleum imports are from China and India.

If all new potential entrants eventually become members of the group, that number would increase to 55%. Many energy buyers and sellers who are members of the same bloc could even create a parallel energy trading system. That would allow BRICS+ economies to reduce their exposure to the Western-led monetary systems and institutions, thus becoming less sensitive to future potential sanctions and other forms of political and economic pressure. These

32% of world output of natural gas and 43% of crude are due to oil BRICS+ member states.

38% of the world’s petroleum imports are also due to BRICS+ countries

countries would, therefore, be able to even influence oil prices.

2. Trade opportunities also remain the key to BRICS+. Trade has been a major economic growth stimulus of BRICS+.

The share of global trade in goods transacted among the bloc’s current members more than doubled to a total of 40% from 2002 through 2022. China’s rising role as a supplier of industrial and consumer products and a commodities importer has been one of the bloc’s key players. China has become an important buyer of Brazilian soybeans and iron ore and an essential seller of sophisticated products, including electric vehicles (EVs), solar panels, and industrial machinery.

3. Although several BRICS+ countries, including the Gulf Cooperation Council, have free trade agreements within the organization, no free trade agreement includes every single BRICS+ country. Now, with the organization’s expansion, this problem is solved. That is why BRICS+ could help its members benefit from greater trade opportunities.

4. Infrastructure and development financing. One of the most important BRICS projects in this area has been the New Development Bank (NDB), 29

[ ANALYTICS ]

which was capitalized at $100 billion.

This bank finances China’s Belt & Road initiative. Saudi Arabia, the UAE, Egypt, India, and Russia are stockholders in the China-led Asian Infrastructure & Investment Bank (AIIB) and have received debt financing from it. By 2023, the NBD and AIIB together had invested $71 billion in credit across numerous projects, including but not limited to public health, infrastructure, and clean energy. Obviously, BRICS+ companies benefit from such investments. The admission of Saudi Arabia, the UAE, and other cash-rich countries could additionally increase the BRICS+ financial resources.

5. Now, we are coming to another vital way to cooperate, namely the BRICS’ monetary policies. As I have mentioned before, BRICS+ countries aim to develop more independence from the international monetary system controlled by the collective West. About 90% of the world’s foreign exchange transactions are conducted in USD through American and EU financial institutions. Western financial sanctions on Russia, especially the freezing of the Russian government’s, Russian companies’, and Russian citizens’ assets in European and US banks highlighted the need to move away from Western-based monetary systems.

Thanks to the fact the BRICS+ group includes leading commodity buyers and sellers, the bloc can show the world how countries can move away from the USD. So, both the bloc’s national currencies and the creation of a common currency are possible. The NDB, for example, has issued about 20% of its loans in Chinese yuan. The bloc has even launched a payment app—BRICS Pay—that allows buying and selling in a few non-USD currencies. Apart from being an effective way to ease the effects of sanctions, this can also save the member countries from foreign exchange volatility during economic recessions. The Payment Task Force, the Think Tank Network for Finance, and the Contingent Reserve Arrangement were established by the 30

WEJ | February-March 2025

BRICS to be used instead of IMF funds to help countries deal with financial crises.

6. New technologies are another way for BRICS countries to cooperate. For example, the BRICS+ Space Cooperation Joint Committee, based on partnerships between Russia and China and China and Brazil, a Partnership on the New Industrial Revolution, and a Center for Industrial Competencies were established by BRICS. These projects promote cooperation and innovation in areas such as intelligent manufacturing, AI, digitalization, and green energy. Developing countries can, therefore, get better access to new technologies, create more intellectual property, and become more technologically advanced in general.

It is likely that BRICS+ will develop more formal institutions and agreements in the coming years. BRICS+ economies are likely to experience

substantial growth over the following years. Despite the group’s lack of official trade and investment agreements, it already has high trade volumes between its members.

BRICS+ will likely further invest in infrastructure, thus improving the business environment and technological progress. Transportation, digital communications, energy, and other projects will lead to higher demand for international companies’ products and services, thus providing opportunities for investors and creating more jobs. The New Development Bank, for example, is financing 15 transportation infrastructure projects in the Indian subcontinent.

THE FUTURE OF BRICS+

According to the International Monetary Fund’s recent report, medium-term growth for the global economy is

WORD ECONOMY GROWTH CONTRIBUTION, 2024-2029 Phillippines 1,2%

Mexico 1,3% Saudi Arabia 1,3% Korea 1,3 % Bangladesh 1,6% France 1,4% Japan 1,7% Vietnam 1,4% UK 1,4% Germany 1,7% Egypt 1,7% Turkiye 1,9% Brazil 2,0% Russia 2,1% Indonesia 3,5% US 11,6%

India 14,8 %

China 21,7%

Source: Bloomberg

WORLD ECONOMIC JOURNAL

PHOTO: TRT WORLD RESEARCH CENTRE

“An analysis of BRICS' founding and new members highlights their divergent interests. China and Russia strongly oppose the U.S.-led global order but lack a cohesive set of values behind this stance, while India pursues a multi-alignment strategy, engaging with both the U.S. and the other major powers. Brazil and South Africa, though less confrontational, have also adopted flexible foreign policies, engaging actively in global affairs, particularly in regions like the Middle East... These disparities among BRICS members reveal a group more defined by its differences than by any shared values or interests. Rather than a unified bloc, BRICS stands out for its diverse internal challenges and the complexities they bring.”

Burak Elmalı is a researcher at the TRT World Research Centre in Istanbul. He holds an MA in Political Science and International Relations from Boğaziçi University. expected to remain low. According to the IMF’s projections, the forecast for global growth is 3.1% in 2029—one of the lowest five-year-ahead projections in decades. According to the IMF’s and Bloomberg’s forecasts, a large proportion of growth over the next five years will come from BRICS economies, including China, India, Russia, and Brazil.

By contrast, the expected contribution of G7 countries, including the US, Germany, and Japan, was revised. According to Bloomberg’s estimates, it is widely expected that China will be the top contributor to global growth over the next five years, with its 22% share bigger than all G-7 members combined. India is the second-highest-growth country.

It is expected to add almost 15% of the total through 2029. The diagram on the previous page illustrates this.

The bloc’s 2024 priorities include integrating new member countries and establishing a new category of BRICS nations that will not receive full membership but will cooperate with the bloc. BRICS is seeking to grow further, as I have mentioned in the previous sections. Current members aim to attract more members and partner nations to have access to other trade organizations.

The countries invited to join the bloc as "partner states" include Türkiye, Indonesia, Algeria, Belarus, Cuba, Bolivia, Malaysia, Uzbekistan, Kazakhstan, Thailand, Vietnam, Nigeria, and Uganda. These partner states might eventually become full members.

Obviously, this expansion comes at a cost. Some US officials see a threat to America’s global dominance from the bloc.

Recently, the newly elected president, Donald Trump, said he would demand that BRICS countries cancel their plans to create a new common currency. If they do not agree, they will face 100% tariffs during his presidential term.

According to Mr. Trump, the BRICS members are trying to cease using the USD. Obviously, this is a threat to the USD, which is the world’s reserve currency. According to Donald Trump’s post on Truth Social, the US government should “require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty U.S. dollar, or they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful U.S. economy.”

These statements come for a reason.

In 2023, Brazil’s president, Luiz Inácio Lula da Silva, suggested creating a common currency in South America to stop relying on the USD. Either creating a common currency, trading in BRICS national currencies, or using banking networks outside the USD-denominated system could allow

member countries, including Russia and Iran, to bypass Western sanctions.

But what are the chances of a new currency? After all, the alliance has economic and geopolitical differences.

However, most of its members do not want to rely on pro-Western institutions and be affected by sanctions.

During the BRICS countries’ summit that took place in Russia in October 2024, Russian President Vladimir Putin said the bloc was “not considering this issue” simply because “its time has not come yet” and “we need to be very careful and act gradually, without any rush."

At the same time, Mr. Putin said the bloc was looking at “the possibilities to make wider use of national currencies” and facilitating coordination between member states’ national central banks to enable trade.

The BRICS+ expansion would probably attract increasing attention from Western countries, including the US, due to the BRICS’ rising economic potential, the group’s expansion, the emergence of international intergovernmental organizations, like the New Development Bank, and the broader move from the USD.

SOURCES: European Parliament - www.europarl.europa.eu Business today desk - www.businesstoday.in Central Bank of France - www.banque-france.fr Global Times - www.globaltimes.cn Investing Strategy - investingstrategy.co.uk/ Research Gate - www.researchgate.net The State Council - english.www.gov.cn Belt and Road Portal - eng.yidaiyilu.gov.cn Africa News - www.africanews.com The Economist - www.economist.com AA - www.aa.com.tr Geopolitical Monitor - www.geopoliticalmonitor.com Asia Nikkei - asia.nikkei.com Council of Councils - www.cfr.org Corporate Finance Institute - corporatefinanceinstitute.com Tufts University - fletcher.tufts.edu Boston Consulting Group - fletcher.tufts.edu E-International Relations - www.e-ir.info The International Monetary Fund - www.imf.org The Washington Post - www.washingtonpost.com BNN Bloomberg - www.bnnbloomberg.ca Brasil de Fato - www.brasildefato.com.br CNN - www.cnn.com

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[ MEGACITIES ]

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WEJ | February-March 2025

WORLD ECONOMIC JOURNAL

URBAN ECOSYSTEMS OF THE FUTURE:

HOW TECHNOLOGY CREATES SUSTAINABLE INFRASTRUCTURE

By Sam Little

T

PHOTO: MAPLE90 / SHUTTERSTOCK

he advent of industrialization has seen a massive shift of people from the countryside and villages to urban environments. Per a UN report, a point has been reached that now 55% of global citizens inhabit urban environments and by the 2030s, it expects this figure to rise to 61%, then to 68% in 2050.

Despite the advancement of technology and jobs, this leap has brought with it an array of environmental ills.

• Air, water, and noise pollution; • The dwindling of green spaces; • Threatening of animal habitats; • Problems with rising temperatures and sea levels; • Mismanaged waste and its adverse effects on nature and urban dwellers.

33

[ MEGACITIES ]

A substantial degree of strain has been detected on those living in big-city environments.

1. The heat island effect: this is the phenomenon in which heat is trapped within an urban milieu by the artificially laid stone surfaces which results in the heat lingering around, thereby posing a hazard to those susceptible to higher temperatures, especially during abnormally hot periods.

2. Flooding: neighborhoods’ impervious surfaces lack sufficient drainage entry points to halt flooding in the event of excessive rain downpouring.

3. Water recharge disruption: greater runoff is produced in an unnatural way, polluting water bodies.

4. Poor access to green spaces for underprivileged communities: certain city neighborhoods don’t get the same access to exercise, recreation, and nature spaces that others do, which impedes the air quality and opportunities to exercise.

5. Climate change: the sea levels rise, resources become more scarce, and weather calamities destroying locales become more frequent.

Nature feels the pressure clamping down on it, of course.

1. Habitats being disrupted and cut off: animals and trees have an ever-reduced area to inhabit and cannot cross into greener pastures.

2. Industrial waste: a big impact on marine life.

3. Proliferation of urban pests: some animals have long coexisted excessively well around humans and have exploded in numbers, irritating residents.

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WEJ | February-March 2025

Global CO2 emissions in transport by mode in the Sustainable Developement scenario, 2000-70 Aviation GtCO2, yr

CHALLENGES OF URBANIZATION

Shipping

10

Meduim and heavy trucks

9 8 7

Light-commercial vehicles

2&3-wheelers

6 5

Rail

4

Passenger cars, buses and minibuses

Light-commercial vehicles Passenger cars

3 2

Two/ three-wheelers

1 0

Buses and minibuses

2000

2010

2020

2030

2040

2050

2060

2070

Rail Notes: Vertical lines indicate the year in which various transport modes have largely stopped consuming fossil fuels and hence no longer contribute to direct emissions of CO2 from fossil fuel combustion. Residual emissions in transport are compensated by negative emissions technologies, such as BECCS and DAC, in the power and other energy transformation sectors.

Sourсe: Our World in Data

BRIEF OVERVIEW OF MODERN URBAN ECOSYSTEMS

The heavily populated environments that the majority of global citizens inhabit now are at the complex confluence of massive man-made infrastructure and pre-existing natural flora and fauna.

These include factories, public squares, highways, streets, malls, and homes juxtaposed with fields, rivers, biospheres, forests, and city gardens.

This interplay includes: • bees pollinating flowers; • trees ingesting carbon dioxide to produce oxygen; • water being filtered for drinking and utilization; • transportation releasing CO2 into the atmosphere; • energy being used and materials are processed, generating waste.

TECHNOLOGIES FOR SUSTAINABLE INFRASTRUCTURE

The World Bank claims that 70% of all global emissions are caused by motor vehicles. Technology offers a pathway to accelerate sustainability and resilience in infrastructure. By enhancing project transparency, incorporating resilient designs, and optimizing material usage, digital tools can significantly streamline construction and maintenance processes while building public trust in the process.

USE OF IOT (INTERNET OF THINGS) FOR MONITORING AND MANAGING URBAN SYSTEMS

As time goes on, the Internet of Things is rendering life ever more livable and convenient. Cities are increasingly gathering all the right

WORLD ECONOMIC JOURNAL

IoT, in Smart Cities Market Size, By Application, 2017-2027

347.6 Bn

PHOTO: EMIZEN TECH

Amit Samsukha of Emizentech wrote in a Forbes piece that logistics companies using IoT in their vehicles will dominate those who do not: "By understanding the current technologies, the challenges to adoption, and future technological trends, leaders in the logistics industry should give themselves the ability to compete, and perhaps even the upper hand, in guiding their companies through the ever-changing technological climate."

data with the sensors in the grandest variety of objects. These sensors are providing extremely handy data— from structural repairs that are proving necessary in a subway or bridge to excessive concentrations of particular toxins in the air.

Cities are stepping up to achieve these things. Cameras are being used for surveillance to detect potential threats and abnormal behavior, and in San Francisco, mapping is provided to drivers on where they can find an available parking spot instead of having to drive around as well as which roads are the most congested. These information systems can also inform drivers of peak traffic times for particular roads.

Buildings have begun regulating temperatures on their own. When a conference room is full of people, technologies are detecting this and

82 Bn

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Smart Citizen Services

Smart Building

Smart Transportation

Smart Utilities

Sourсe: Our World in Data

increasing the air conditioning while shutting it off and shutting the lights off when nobody is present. On top of all that, as data is collected over time by censors, an extensive variety of data-driven solutions can be produced on top of that.

Primary applications for the IoT include: 1. Ecological monitoring and pollution tracking; 2. Parking spot search; 3. Smart transport networks; 4. Emergency services systems and public safety; 5. Energy preservation; 6. Improving the quality and utilization of water; 7. Waste handling; 8. Congestion mitigation technology; 9. Ecologically friendly city planning; 10. Infrastructure upkeep.

A couple of the most wonderful ways of preserving resources and guaranteeing greater safety and convenience for the public are AI-powered transportation and utilities. On the one hand, drivers can be evaluated based on their driving styles, from whether they are running errands while they’re supposed to be working to alcohol sensors to how often they change the oil to how often they are abruptly accelerating and pumping the brakes to traffic violations.

These factors both help save resources for people. In combination with advising people of common risks on particular roads and recommendations on the speed to drive to maximize fuel efficiency, this renders the roads safer by enforcing careful driving techniques, arranging for necessary maintenance when the system issues an alert for one, and keeping fewer vehicles on the road at once.

35

[ MEGACITIES ]

63 amps house

by electricity sharing via a common public power grid. To reduce the wait times at charging stations, some cars could share their electricity with each other during hours when it’s not being consumed.

Data on these drivers is also collected in quite large numbers, which will be used to enhance their engagement and their contentment with the vehicles. This has been proven to be key in observing regulatory initiatives.

URBAN ECOSYSTEMS AND ECOLOGY

7,2 kW

5,5 kW

5,5 kW

Source: Power Electronic News

On top of that, the fantastic technology that these same types of sensors provide has finally taken us to the era of driverless cars. Now, people are able to order taxis for super-low prices, all without having to worry about any erratic behavior at all. They will also no longer be able to defraud insurance companies on false accidents.

Citizens will also be warned of: • GPS vehicle tracking; • flight status updates; • inventory management.

In the future, people are going to look back on the current era of utilities as if we were living the tough manual life. Home appliances operated by various IoT companies are becoming all the rage. Right now, a mother who is out at her son’s soccer game can preheat her oven so that it’s ready for the turkey by the time she gets home. If she forgets to turn on some calming music for a baby, she can turn it on manually.

As for the roads, electric cars and buses seem to be the future, as electric cars require a far lower fuel cost for consumers. Electric vehicle sales have recently tripled; meanwhile, as electric vehicles have grown more affordable, they could potentially be facilitated 36

WEJ | February-March 2025

Urban ecosystems cannot be looked at as a separate locale from nature as they affect nature both in different and indirect ways. Topical issues in the world today like carbon emissions, undersupplied drinking water, and pollution in the atmosphere and streams trace back to decision-making, behavior, economics, and politics in city environments.

Indeed, cities depend on nature as well, as research has shown that a lot of cities require a natural body of water several times its size in order to perpetuate itself. These same political tools and civil society will become a necessity for preservation of a clean environment and resources that can be used and reused for natural preservation.

A curious phenomenon within this dynamic is the substantial boost of certain animal populations compared to others’. Rats and pigeons are exploding in population, while certain others, like big cats, are dwindling at a rapid rate.

Green buildings and energy-efficient technologies Green buildings refer to buildings made using materials and performed in a style that is easier on the environment. There is an official green certification system in different countries.

For instance, these are the Leadership in Energy and Environmental Design (LEED) and the Building Research

Establishment Environmental Assessment Method (BREEAM) frameworks in the United States and the UK, respectively. The way a building qualifies for this is based on such criteria as energy efficiency, the materials used, innovation, water use, and interior space quality.

Popular eco-friendly construction materials include: • recycled steel; • bamboo; • hempcrete; • cork; • reclaimed wood; • rammed Earth; • mycelium.

The materials used are designed to keep the amount of energy used to a minimum, as well as using renewable resources when possible. This includes insulation with a high R-value as well, such as closed-cell spray foam. They also use technological innovations like thick windows, that don’t pass heat, and top-notch air conditioners. On top of that, there are also green roofs, which use solar panels and wind turbines, which allow for even more power to be generated. Sometimes, these even create surplus power.

Furthermore, there will be a lot of money to be made in green home improvement. As Victoria Borrows of the World Green Building Council stated, “New sustainable buildings alone are set to represent a $24.7 trillion investment opportunity in emerging markets by 2030.”

Another important aspect of that is the surroundings of homes and commercial buildings. Surrounding it with greenery improves air quality. Homes using solar panels can at times gain too much heat. Solutions for this include a cool-roof system, which involves the way insulation is installed. Another strategy is for homes to face north and south where the sun doesn’t travel.

Overhangs and electrochromic glass can also can block excess heat from getting inside a house, while

WORLD ECONOMIC JOURNAL

Insulation R-Values (per inch) Fiberglass (batt)

3.14

Fiberglass (blown-attic)

2.2

Fiberglass (blown-wall)

3.2

Rock Wool (batt)

3.14

Rock Wool (blown-attic)

3.1

Rock Wool (blown-attic)

3.03

Cellulose (blown-attic)

3.13

Cellulose (blown-wall)

3.7

Vermiculite

2.13

Air-Entrained Concrete

3.9

Urea Terpolymer Foam

4.48

Rigid Fiberglass (>4lb/ft3)

4

Expanded Polystyrene (beadboard)

4

Extruded Polystyrene

5

Polyurethane (foamed-in-place)

6.25

Polyisocyanurate (foil-face)

Type of Insulation

3.14

Fiberglass Batt

6.25

Polyurethane (foamed-in-place)

3.13

Cellulose Blown (attic)

7.2

Polyisocyanurate (foil-faced)

7.2

R-VALUE

Source: World Green Cities Council

PHOTO: COLLINGWOOD MAGPIES

Trombe walls absorb heat from the sun. For conservation, smart dishwashers, fridges, and washing machines help out a lot. Some buildings are completely zero-energy, relying only on solar energy and wind. Lastly, landscaping and designing systems can also be organized to handle stormwater overflowing.

Waste and water resource management There are a lot of global issues surrounding water in the modern world.

Chief among these is water security and floods. A lot of the water people have to acquire is not clean and thus causes a large variety of diseases. In other cases, there may not be sufficient water to help crops grow. The World Bank quoted a Yemeni woman and her plight: “After my children grew up, we started to rely on water trucking—but the prices are exorbitant. We had to save up money and sometimes had to choose between buying water or food.”

A few of the main focuses resolving around water are:

• Where the water is taken from: can be surface or underground water. Where a company can retrieve its water, via what method, and in which quantity is determined by regulations.

• How the water is used: a different permit must be obtained for each form in which water is going to be used by a company. These can be part of its production or hygiene.

The business must submit a report of what kinds of contaminants the resulting water will contain.

• How the water is disposed of: this too will require multiple permits and documentation of the way this water is disposed of, what chemicals set off into the air, and how much.

The World Bank predicts that the supply of rainwater will be 40% below demand, requiring shrewd planning and coordination to deliver this supply. In addition, it continues that by 2050, food production will need to increase by 50% to feed the 10 billion people that will be around.

As of right now, the Chair of the Global Citizen Board, Peter Murphy, reports that the food is out there, but it’s just not being used properly to account for global food security needs. “It's not right that 3 million children die each year of malnutrition because of where they are born. There is enough money in the world to solve these problems…

All I say, all we say, is to do something.”

37

[ MEGACITIES ]

EXAMPLES OF SUCCESSFUL CITIES

Everyone strives to live in a place free of stress, pollution, noise, and hazards. Wouldn’t it be a dream come true to have our hassles accounted for so that on your way to work, there is almost no traffic jam, all the while filled with the satisfaction that you conserved resources and left as small a carbon footprint as you possibly could? Now we are going to look at some of the frontrunners in realizing real smart, green cities.

Let’s first consider, though, what makes an advanced, environmentally friendly city.

1. Walkable: This is a gift that keeps on giving. People want to be able to walk outside, see beautiful scenery, and have

activities to engage in without having to drive a long distance. This is good because it gives people much-needed exercise, but also it eliminates the need to consume resources and fill the city with smog. People can also, of course, take a bike or scooter around town.

2. Sustainable design: Buildings constructed with high-R-value walls and thick windows help conserve heating and cooling. Other materials, like recycled steel, reduce the need for excess hazardous production. These types of measures help reduce the emissions being released into the city and the atmosphere.

3. Easy-to-access public transit: The ideal environmentally friendly city is one where people share their form of transportation—in a bus, a subway, a cable car, or something of that

WORLD GREEN BUILDING COUNCIL Green buildings can improve people's health & wellbeing

GOOD HEALTH AND WELL-BEING

Green buildings can use renewable enerdy, becoming cheaper to run

AFFORDABLE AND CLEAN ENERGY

Building green infrastructure creates job and boosts the economy

DECENT WORK AND

ECONOMIC GROWTH

Source: World Green Cities Council

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WEJ | February-March 2025

Green buildings are the fabric of sustainable communities & cities

Green buildings use 'circular' priciples, where resoures aren't wasted

Green building design can spur innovation and contribute to climate resilient infrastructure

INDUSTRY, INNOVATION AND INFRASTRUCTURE

SUSTAINABLE CITIES AND COMMUNITIES

RESPONSIBLE CONSUMPTION AND PRODUCTION

nature. This is because each individual automobile produces extra emissions, especially if a road is congested with bumper-to-bumper traffic a lot.

4. Ubiquitous smart technology: This helps plan out roads that feature certain hazards or have a lot of traffic jams, which can also be adjusted by IoT detecting this and evening out the traffic light timing to even things out.

If maintenance is required, a technician will be alerted and arrive on the site to address it.

5. Public-private premises: Highrise buildings eliminate the need for people to travel long distances. If apartments and strip malls or regular shopping malls are located inside the same building, people will enjoy greater social cohesion with each other, making for a stronger community.

Green buildings produce fewer emissions, helping to combat climate change

CLIMATE ACTION

Green buildings can improve biodiversity, save water resources and help to protect forests

Through building green, we create strong global partnership

LIFE ON LAND

PARTNERSHIPS FOR THE GOALS

WORLD ECONOMIC JOURNAL

ANALYSIS OF THE EXPERIENCES OF SINGAPORE, STOCKHOLM, AND TOKYO

PHOTO: GREGOR J / SHUTTERSTOCK

Let’s talk about three remarkable smart, green cities from which to draw inspiration.

Singapore Singapore is known by many as a “garden” city and the United Nations Development Programme (UNDP) ranked it the top smart city in the world to boot. At one point, it was a city full of muddy, polluted rivers with very small territory for everyone to live in and, therefore, lots of slums.

The limited living space spurred the city state’s leaders to set their sights on environmental consciousness.

As soon as it began developing its city, it incorporated vegetation throughout its planning. Starting in the 1960s, it planted well over 55,000 trees as per the Parks and Trees Act. In 2014, PM Lee Hsien Loong launched the Smart Nation initiative, which managed to solve a myriad of practical problems for its citizens. There is an autonomous fleet boating around delivering the disabled, students, and senior citizens. Its overcrowded buses became a thing of the past.

Singapore has an app for just about everything. After all, it is a tech hub.

This allows everybody: • government services; • a digital ID they can use for official purposes; • incident reporting, in case people are breaking the law; • mergency updates; • user-centric news feed.

Stockholm Stockholm is a city of 987,000 people spread across several islands. It is quite conscious of rising sea levels, and in 2010, it was awarded the title of being the first European Green Capital. For that reason, Stockholm has always been among the most ambitious in fighting carbon emissions.

Right now, the city has committed to

Singapore downtown, Pickering Street outside ParkRoyal Hotel

becoming carbon neutral by 2040.

The capital city created the Digital Demo Stockholm arena to conduct projects revolving around sustainability, innovation, and digital developments. To achieve this, the city council’s own Stokab built the world’s longest network of fiber optics, with 23,000 points extending to nearly every commercial property and 90% of families in the area. Permits are offered digitally by the city, as well as a Smart Traffic app and even a work route-building app.

The city is using smart LED lamp posts that cut its power consumption in half. It operates with its data available in the public domain so that additional app developers can create convenient tools that can make city dwellers’ lives easier. Stockholm itself has never

produced many industrial goods and is more of a service-based economy, so it has never had any incentive not to consider conducting a green, smart society.

Tokyo Tokyo is a massive metropolis, its population numbering well over 14 million. For that reason, it has always felt the pressure of taking a responsible attitude toward its carbon footprint. Tokyo has always had a tradition of cleanliness and respecting the environment. It has a massive 80,000-hectare network of parks and gardens throughout the city without producing much waste.

Considering how crowded Tokyo is, having somewhere for people to escape the hectic urban environment as well as enjoy some better oxygen with all of 39

[ MEGACITIES ]

the industry that’s going on in the big city. Besides, all of that carbon getting released is going to need greenery to balance it out.

Tokyo has an AI-powered facial recognition system via cameras that takes a single second to recognize a person, even if they’re wearing a facemask. Toyota has also produced robots that can help disabled people and elders with their limitations. The city is known for its extensive subway, railway network, and ubiquitous elevators and escalators. The city’s also committed to becoming 5G by 2030.

New smart city projects (e.g., NEOM in Saudi Arabia).

Other smart cities aren’t relegating themselves to the back seat either.

There are a lot more projects underway with cities making their first major leap to render themselves more livable and comfortable.

One of the most prominent of these is Saudi Arabia’s NEON, a green

city stretching 170 kilometers and 500 meters tall, just 200 meters wide.

Transportation along the line is swift and efficient and the city is designed for a 9-million-person capacity. The idea is to make it a comfortable, green space where nature and people can flourish together.

The Telosa project in USA is one designed to be vertical, big enough to house millions of people in the middle of a desert. In India, there is Amaravati with its main spectacle a needle-shaped structure. The majority of the area will be covered in vegetation and water. Mexico also has developed a gorgeous Smart Forest City in Cancun.

FUTURE OF CITIES

In 1990, there were only 10 megacities in the world. By 2030, there will be a whopping 43, primarily in Africa and Asia. The UN Department on Economic and Social Affairs (DESA) further detailed this trend:

His Royal Highness Mohammed bin Salman of Saudi Arabia made commemorated the momentous project: “[This is] an event bringing nations from around the world together under one roof, to advance global climate ambitions by inspiring joint activity at the local, regional, and international levels. Our partnership with Egypt reflects a shared belief in the importance of collaborative action to address the environmental and climate challenges facing the region and the world today.”

Megacities of the world in 2018 and 2030 (more than 10 million people)

Moscow

Los Angeles

Paris

New York

Tehran

Istanbul Cairo

Mexico Bogota

Lagos Kinshasa

Lima Rio Sao Paulo

Megacities in 2018

Buenos Aires

New megacities by 2030 Source: Research Gate

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WEJ | February-March 2025

Luanda

Beijing

Dehli Chengdu Lahore Chonga Dhaka Karachi

Seoul

Tokyo

Osaka-Kobe Shanghai Nanjing Guangzhou

Ahmadaba Kolkan Mumbai Manila Hyderabad Bangalore Bangkok Ho Chi Minh City Dar es Salaam Chennai Jakarta

PHOTO: RON PRZYSUCHA / U.S. DEPARTMENT OF STATE

London

WORLD ECONOMIC JOURNAL

World Urbanization by Region: 1950-2030 1950

2007

2030

Percent urban

72 60

54

51

49

84

79

87

64 42

17

15

World

76

51

41

37

29

78

Africa

Asia

Europe

Source: Research Gate

“Together, India, China, and Nigeria will account for 35 percent of the projected growth of the world’s urban population between 2018 and 2050…It is projected that India will have added 416 million urban dwellers, China 255 million, and Nigeria 189 million.”

Many people see these places as soulless concrete jungles, as many of them started out by cutting out all the pre-existing natural elements when they were constructed. Some may say that there will just continue to be more pollution and an exacerbation of already existing health hazards there.

This, however, does not reflect the current trend that is taking place.

All around the world, countries have pledged to play their part in taking care of the environment and reducing emissions. It goes without saying as well that convenient technology will be a godsend for all parties.

DEVELOPMENT FORECASTS UP TO 2030

People are stampeding into the cities.

Karen C. Seto et al., in their research, declare that the most pronounced case of this is in Africa, where the rate of urbanization will jump by as much as 590%. The expectation is that the cities will stretch outward without the same rate of crawling and reach three

In 1990, there were only 10 megacities in the world.

By 2030, there will be a whopping 43, primarily in Africa and Asia times the total rate of biodiversity hotspots of 2000 in 2030.

This will undoubtedly wreak significant destruction on the animal habitats nearby. Encroachments on land inhabited by animals will also heavily occur in the tropics. Stanford used its AI model recently to predict that global warming will rise another 1.5 degrees Celsius by the mid-2030s.

THE IMPACT OF TECHNOLOGY ON QUALITY OF LIFE

Climate change has been a substantial challenge in recent decades, as many

Latin America/ Caribbean

North America

developed countries don't necessarily consistently hit their goals, and countries that are still developing aren’t expected to enact such measures effectively until they’re significantly industrialized. Climate change will remain a major challenge; however, the Paris Agreement objectives of each country are achievable through the marvels of engineering and new technology.

The level of societal trust has significantly dropped and significant measures will have to be put in place to that end. Additional ones must further be taken to help rebuild social connections as well. On the positive side, technology will significantly boost productivity. Part of that productivity will be the big data analysis tied in with the Internet of Things. It may, in fact, prove so helpful that the issues that necessitated these solutions could be a blessing in disguise.

Real-time data will also make life significantly easier for urban dwellers by modeling future changes in their environment in the form of a digital twin.

Urban planners are becoming a more in-demand job and they will be able to use these models to predict where garbage will need to be collected, where energy will be required, where waste will be released, and how to mitigate excessive levels of traffic.

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[ AWARDS ]

WEJ AWARDS 2024 The World Economic Journal's "WEJ Awards" recognize individuals who have made significant contributions to specific fields while demonstrating a commitment to advancing humanity. In 2024, the awards focused on a key finding of Nobel Laureate Daron Acemoğlu, who was also named WEJ's Person of the Year: the importance of inclusive and equitable institutions.

A

cemoğlu's research highlights how extractive institutions, which benefit only a select few, hinder societal progress. In contrast, pluralistic and inclusive institutions empower individuals by fostering greater participation in decision-making and ensuring equitable access to opportunities. Aligned with this principle, the awards recognize leaders who have championed projects that create a more equitable and inclusive society. These projects empower individuals across diverse social groups by providing them with greater opportunities for living, creativity, self-realization, and contributing to their communities.

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WEJ | February-March 2025

WORLD ECONOMIC JOURNAL

WINNER DARON ACEMOĞLU NOMINATION PERSON OF THE YEAR

PHOTO: BRYCE VICKMARK

2024 Nobel laureate in economics and Institute Professor of Economics at MIT For studies of how institutions are formed and affect prosperity

43

[ AWARDS ]

WINNER HIS HIGHNESS SHEIKH KHALED BIN MOHAMED BIN ZAYED AL NAHYAN NOMINATION EMPLOYMENT Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council Mawaheb Talent Hub is a strategic initiative launched by the Abu Dhabi government to address the employment challenges faced by specific segments of the UAE population, including recent university graduates and older individuals seeking to re-enter the workforce. These demographics often encounter significant barriers to employment. Mawaheb Talent Hub seeks to bridge the gaps left by traditional employment services that may not adequately address the unique needs of these groups. As the first employment assistance center in Abu Dhabi to leverage advanced AI technologies, personalized training, and tailored career path development, Mawaheb Talent Hub aims to equip participants with the necessary skills, connect them with suitable job opportunities, and ultimately secure their employment.

“Technological change and innovation can have significant impacts on employment patterns, both by creating new jobs and by displacing workers from existing ones.” (“The Environment and Directed Technical Change”)

WINNER CLARA BRUGADA NOMINATION SOCIETY

The Units for Transformation and Organization for Inclusion and Social Harmony (UTOPÍAS) are a network of community centers located in underserved areas of the city. Established and expanded under the mayor's leadership, these centers aim to reduce inequality, foster community building, and contribute to the revitalization of these neighborhoods. UTOPÍAS provide a range of free services to vulnerable populations, including seminars, workshops, sports and music programs, and access to affordable food. Each center specializes in addressing specific community needs. For example, some centers offer support groups for victims of domestic violence, while others provide programs for individuals struggling with addiction.

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WEJ | February-March 2025

“When societies become more inclusive, they can harness the talents and energies of their entire populations, leading to more vibrant communities and sustainable development.” (“Understanding Prosperity and Poverty”)

PHOTO: ABU DHABI MEDIA OFFICE; ENEASMX / CC BY-SA 4.0

Mayor of Mexico City

WORLD ECONOMIC JOURNAL

WINNER SILVIA GRECCO NOMINATION PUBLIC SERVICES Secretaria Municipal da Pessoa com Deficiência, São Paulo The Intermediation Center for Brazilian Sign Language (Central de Intermediação em Libras) is a groundbreaking initiative by the São Paulo City Hall designed to ensure equal access to municipal services for deaf and hard-of-hearing citizens. This innovative program provides real-time, 24/7 access to qualified sign language interpreters through video calls, enabling seamless communication between citizens and government agencies.

“Public services must be accessible and effective for all members of society if we want to achieve sustained economic growth and social stability.” (“State Capacity and Economic Development”)

WINNER TARIQ HILAL AL BARWANI NOMINATION LABOR MARKETS

PHOTO: DANUTTI DE CARVALHO; TERRYWIKI12 / CC BY-SA 4.0

Founder, Knowledge Oman Knowledge Oman is a non-profit organization established to foster collaboration between government and private entities in developing a knowledge-based society. By partnering with both local and international organizations, Knowledge Oman aims to implement projects that cultivate "sustainable knowledge," particularly focusing on equipping young people with the skills necessary for the future economy. In 2024, the organization launched the KO Academy, a new initiative designed to bridge the gap between theoretical knowledge acquired in universities and the practical skills demanded by the job market. The Academy offers students and educators access to expert-led sessions and workshops, providing them with valuable industry insights.

“Education systems should equip students with the skills needed to succeed in the modern economy, rather than simply imparting theoretical knowledge.” (“Why Nations Fail”) “Technological change and innovation require continuous adaptation and retraining of the workforce to match evolving demands of the labor market.” (“The Environment and Directed Technical Change”)

45

[ AWARDS ]

WINNER JOYCE LIU NOMINATION TECHNOLOGY Director, TECH4ALL Digital Inclusion Program Office, Huawei TECH4ALL is a long-term global Huawei initiative focused on leveraging technology to enhance digital skills and bridge the digital divide, particularly for vulnerable populations. This initiative encompasses education, environmental protection, healthcare, and development.

In September 2024, Huawei launched the second phase of the 'Technology-enabled Open Schools for All' program in Brazil, Egypt, and Thailand. This program aims to drive digital transformation in education by fostering inclusive learning environments that seamlessly integrate offline and online learning experiences. Key components of the program include teacher training in ICT skills, the development of digital educational resources, and fostering collaboration among schools. The ultimate goal is to ensure equitable and lifelong learning opportunities for all.

“In the modern era, technology plays a critical role in shaping economies and societies. Countries that fail to adapt to technological advancements risk falling behind, both economically and socially.” (“Why Nations Fail”)

WINNER SERGEI SOBYANIN NOMINATION CITY Mayor of Moscow

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“Inclusive institutions create the basis for sustained economic growth because they ensure that a large segment of society has the opportunity to participate in economic life. This includes both the creation of secure property rights and the establishment of public services and infrastructure that are accessible to everyone. Without these foundations, economies cannot grow sustainable.” (“Why Nations Fail”) “Cities flourish when they are part of a larger network of inclusive institutions. This ensures that urban areas attract talent, facilitate trade, and become centers of innovation. When cities are supported by inclusive institutions, they can transform into hubs of economic activity, creating widespread prosperity.” (“Cities and Growth”)

PHOTO: HUAWEI; MOS.RU

“Moscow – a city for everyone" is one of the foundational principles and key priorities of Moscow's development concept under the leadership of mayor of Moscow S. Sobyanin. Within the framework of this concept, the city has created and is constantly improving institutional, physical, and service infrastructure in all areas significant to citizens, from education and healthcare to transportation and access to government services. To ensure that everyone's opinion is heard, the city has developed electronic participation services ("Active Citizen," "Electronic House," "City of Ideas," "City of Tasks") and implemented a system of remote electronic voting. The city's transportation accessibility and overall connectivity are being enhanced through the implementation of a comprehensive accessibility concept, the development of public transportation systems, and highways.

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WINNER SHIFERAW TEKLEMARIAM NOMINATION SECURITY Commissioner, Ethiopia Disaster Risk Management Commission A significant challenge in disaster warning systems is the failure to effectively communicate critical information to vulnerable populations.

This often occurs due to language barriers or inadequate communication channels, leaving entire communities unprepared for natural disasters.

Ethiopia, facing multiple threats including droughts, floods, armed conflicts, and economic shocks, is particularly vulnerable. In collaboration with the UN Office for Disaster Risk Reduction, the Early Warnings for All initiative, the UN Country Team in Ethiopia, and the World Bank, a comprehensive analysis was conducted. The analysis focused on enhancing community resilience by improving information dissemination, ensuring critical information reaches all communities, including those with limited access; building local capacity – empowering communities to effectively receive, understand, and utilize disaster warnings; expanding access to resources – providing communities with the necessary tools and resources for disaster preparedness. These efforts have contributed to the development of an inclusive early warning system that better protects vulnerable populations in Ethiopia.

“Inclusive states not only manage to avoid civil wars and high levels of criminality; they also manage to provide basic public goods, such as roads, law and order, and some amount of schooling and basic health care, almost universally.” (“States and Power in Africa”)

WINNER CHRISTEL HEYDEMANN NOMINATION AI

PHOTO: DORINE ODONGO / CC BY 2.0; SCHNEIDER ELECTRIC

CEO, Orange Group “Fine-tuning AI Large Language models to understand regional languages in Africa" is a part of Orange's commitment to digital inclusion and fostering local business growth in the Middle East and Africa. The company has partnered with OpenAI and Meta to fine-tune AI large language models to understand local African languages currently not supported by any GenAI model. This project will enable customers to interact with Orange in their native languages. Open-source AI models will also be provided by Orange under a free, non-commercial license for use in sectors such as healthcare, education, and others. Orange plans to collaborate with local startups and technology companies to work on these AI models, aiming to bridge the digital divide in Africa.

“Inclusive institutions are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and enable them to make the choices they wish.” (“Why Nations Fail”)

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WINNER PETRA OLSCHOWSKI NOMINATION DEVELOPMENT STRATEGY Minister of Science, Research and Arts for the State of Baden-Württemberg Citizens' Jury “Artificial Intelligence and Freedom” is a series of meetings with citizens of Baden-Württemberg, hosted by the University of Tübingen. The purpose of these meetings is for citizens to formulate recommendations for ethical AI research principles, which will be summarized in a memorandum for the consideration of the Ministry. The goal of the project is to foster a discourse on AI that can serve as a foundation for policymaking based on societal values and the diverse perspectives of citizens. Participants were randomly selected from all four administrative districts of Baden-Württemberg and from municipalities of various sizes to ensure a broad range of viewpoints and personal experiences.

“For inclusive institutions to work, it is crucial that there is some degree of centralization of the state, so that political authority and the ability to enforce rules and regulations are consolidated. But unless this process of centralization is accompanied by the building of inclusive institutions, allowing different groups to have a say in decision making, it will ultimately fail to bring prosperity.” (“Why Nations Fail”)

Former Mayor, Austin The Austin Housing Conservancy stands as the United States' pioneering non-profit-managed investment fund dedicated to affordable housing. The Conservancy's operational model involves acquiring existing market-rate housing units and subsequently offering them for long-term lease at below-market rates. This initiative specifically targets households earning approximately 80% or less of the area's median income, with a particular focus on young professionals, nurses, teachers, and other essential community service workers who face significant challenges in securing affordable rental housing.

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“Economic institutions shape how an economy functions and perform by determining the incentives of the key players in the economy. If economic institutions are inclusive, they will foster economic activity, productivity growth, and economic prosperity. If they are extractive, they will instead impede economic activity and progress, leading to stagnation and poverty. Therefore, governments should strive to create and maintain inclusive economic institutions that provide equal opportunities and access to social benefits for all citizens.” (“Why Nations Fail”)

PHOTO: MARTIN LUTZ / CC BY-SA 3.0 DE; DAVID HUME KENNERLY / LBJ LIBRARY

WINNER STEVE ADLER NOMINATION HOUSING

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WINNER YVONNE AKI-SAWYERR NOMINATION ENVIRONMENT Mayor, Freetown

PHOTO: MARK CONT / CC BY-SA 4.0; JUAN DIEGO CANO / FOTOPRESIDENCIA DE COLOMBIA

Transform Freetown is a strategic development plan for the city, launched by the mayor shortly after taking office. The plan was developed through extensive community engagement, involving over 300 meetings and online surveys. One of the plan's primary goals was to increase the city's resilience to natural disasters, particularly floods. Between 2019 and 2023, the city planted 977,000 trees, created over 1,500 jobs in the forestry sector, and over 1,200 jobs in waste management. Additionally, more than 2 kilometers of drainage channels were constructed, and other measures were implemented. These initiatives not only supported local communities and engaged them in the city's development but also significantly improved the city's resilience to floods and reduced temperatures. The next phase of the plan, spanning until 2028, aims to create an additional 150,000 jobs.

“It is the way the state and society interact and control each other that determines the capacity of our state, the policies of our government, and our resilience, prosperity, security, and ultimately, liberty.” (“Balance of Power”)

WINNER CLAUDIA LÓPEZ HERNÁNDEZ NOMINATION GENDER INCLUSION Former mayor of Bogotá Bogotá Care Blocks is a municipal program that supports women engaged in unpaid care work (caring for sick relatives, people with disabilities, children, etc.). A 2021 study revealed that 90% of women in Bogotá are involved in unpaid care work, and 30% of them are fully dedicated to it. The city has established over 20 "blocks" where staff assist women in caring for their dependents, while the women themselves can attend educational courses and improve their skills under the guidance of mentors.

“Inclusive institutions are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and enable them to make the choices they wish.” (“Why Nations Fail”)

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PHOTO: PHONLAMAI PHOTO / SHUTTERSTOCK

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WHEN MACHINES LEARN YOUR JOB: THE IMPACT OF AI ON FUTURE PROFESSIONS AI isn't just changing jobs—it's rewriting the rules of human work, creating winners and losers in ways that will change society for decades to come.

By Erfan Alam Serniabat

D

uring the Industrial Revolution, the steam engine and assembly line represented pivotal moments for factory workers. Artificial intelligence is now poised to reinvent white-collar professions on previously unheard-of proportions. Kweilin Ellingrud, a senior partner at McKinsey and director of its Global Institute, reports that generative AI alone could affect at least 10% of tasks in the US job market. She further stresses that this wave will affect “all spectrums of jobs.” She then concludes by saying: “It is much more concentrated on lower-wage jobs, which are those earning less than $38,000. In fact, if you’re in one of those jobs, you are 14 times more likely to lose your job or need to transition to another occupation than those with wages in the higher range, above $58,000, for example.”

These changes are similar to trends seen in the past, but they also bring new challenges. During the Industrial

Revolution, mechanical looms replaced textile workers while creating new positions in industrial operations and management.

Similar changes are happening on a larger scale in the current AI revolution. By 2030, McKinsey estimates that artificial intelligence might automate up to 30% of current hours worked, mostly impacting professionals in customer service, food service, production or manufacturing, and office support.

The report, however, states that generative AI could enhance the way STEM (Science, Technology, Engineering, and Mathematics), creative, and business and legal professionals work rather than eliminating a significant number of jobs outright.

The main distinction between this wave of automation and past ones is that artificial intelligence can improve the capabilities of humans instead of only replacing them. This difference presents chances for experts able to modify their skills to collaborate with artificial intelligence systems.

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Estimated labor demand change and generative AI automation acceleration by occupation, US, 2022-30

35

Midpoint automation adoption1 by 2030,%

Health professionals

1525

30

20

10 -5

Change in labor demand2,%

0 -5 -10 -15 -20

STEM professionals

Increasing labor demand and modest change of work activities

15

Property maintenance Mechanical installation and repair

Agriculture

Production work

Food services

5M 10M

Increasing labor demand and high change of work activities Managers

Builders Transportation services

3540

Employment, absolute

Health aides, technicians and wellness

25

2535

Creatives and arts management Business and legal professionals

Community services

10

Education and workforce training

15

20

Decreasing labor demand with modest change of work activities Customer service and sales Office support

Increasing in automation adoption drive by generative AI acceleration, percentage point Midpoint automation adoption is the average of early and late automation adoption scenarios as referenced in The economic potential of generative Al: The next productivity frontier, McKinsey & Company, June 2023.

We consider multiple drivers affecting demand: rising income, aging populations, technology investment, infrastructure investment (including Bipartisan Infrastructure Law), rising education levels, net-zero transitions, marketization of unpaid work, creation of new occupations, automation (including generative Al), increased remote working and virtual meetings, and e-commerce and other virtual transactions.

2

Source: McKinsey & Company, AI Adoption Rate by Occupation, 2022 to 2030.

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PHOTO: ADOBE STOCK

1

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Sizing the price – Which regions gain the most from AI? North America

Northern Europe Total impact: 9.9% of GDP ($1.8 trillion)

Total impact: 14.5% of GDP ($3.7 trillion)

China

Southern Europe

Total impact: 26.1% of GDP ($7.0 trillion)

Total impact: 11.5% of GDP ($0.7 trillion)

Developed Asia Total impact: 10.4% of GDP ($0.9 trillion)

Latin America Total impact: 5.4% of GDP ($0.5 trillion)

Rest of the world Total impact: 5.6% of GDP ($1.2 trillion)

All regions of the global economy will experience benefits from artificial intelligence

China and North America will also experience significant economic gains from Al enhancing GDP by

Total $10.7 trillion

70% of the global economic impact

26.1% 14.5 %

2030

Source: PwC, Total Economic Impact of AI.

Northern and Southern Europe and Developed Asia will also experience significant economic gains from Al enhancing GDP by 9.9 % 11.5 %

Developing countries will experience more modest increases due the much lower rates of adoption of Al technologies expected

2030

10.4 %

PHOTO: WORLD ECONOMIC FORUM

WHICH JOBS WILL AI AFFECT FIRST?

The influence of artificial intelligence on employment is similar to earlier technological transitions but on a far larger scale.

According to McKinsey's study, by 2030, around 12 million people—from manufacturing to customer service—will have to change their careers. Workers with lower-paying jobs are up to 14 times more likely to need to switch careers than people with the highest-paying jobs, and most of them will need to learn new skills to do so. The study also iterates that women are 1.5 times more likely to change into new occupations compared to men.

“More than half of the ~8.6 million recent occupational shifts in the United States involved workers leaving roles in food services, customer service, office support, and production.”— McKinsey reports Sectors Most Vulnerable to Automation The World Economic Forum's "Future of Jobs Report 2020" indicates that accommodation and food services, manufacturing, agriculture, transportation, and retail and trade are industries with strong automation potential. According to the

“The fourth industrial revolution, however, is not only about smart and connected machines and systems. Its scope is much wider. Occurring simultaneously are waves of further breakthroughs in areas ranging from gene sequencing to nanotechnology, from renewables to quantum computing. It is the fusion of these technologies and their interaction across the physical, digital, and biological domains that make the fourth industrial revolution fundamentally different from previous revolutions.”

— Klaus Schwab, Founder and Executive Chairman of the World Economic Forum 53

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Estimated shifts to another occupation, by category, 2019-22 Resilient and growing 2.3M STEM professional, 400K Health aides, technicians, and wellness, 700K

Others, 600K

Stalled but rising 1.6M Builders, 300K Community services, 300K

Education and workforce training, 400K

Others, 600K

Hit and declining 4.7M Food services, 1.3M Customer service and sales, 1.3M

Office support, 1.2M Production work , 900K

Source: McKinsey & Company, Occupational Shifts, 2019 to 2022.

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report, by 2025, automation and a new division of labour between humans and artificial intelligence will disrupt 85 million jobs worldwide.

Brookings also reviewed OpenAI's GPT-4 ratings of task susceptibility and discovered that 36% of female workers are in positions where generative AI might save 50% of the time required to complete tasks, compared to only 25% of male workers. Having said that, the greatest potential for automation resides in office and administrative support fields, where women unfortunately account for the overwhelming majority of the almost 19 million Americans employed in this sector.

The International Labour Organisation recognises that this change creates both opportunities and disruption. While some industries see job losses, others grow really dramatically. For example, healthcare might see fewer administrative positions but more demand for experts able to collaborate with artificial intelligence systems. In a similar vein, tech companies anticipate significant expansion in cybersecurity, data analysis, and machine learning programming.

Jobs That Could Become History As stated in the study by Brookings, as well as the McKinsey report, office and administrative support roles are particularly vulnerable to AI automation. This covers professions including customer service agents, administrative assistants, and data entry clerks. AI now has the ability to effectively manage tasks such as data processing, scheduling, and responding to routine customer requests.

Another McKinsey's report, "AI, Automation, and the Future of Work: Ten Things to Solve for," shows that only about 5% of occupations could be fully automated using current technologies. However, partial automation will be widespread—approximately 30% of the activities in 60% of all occupations could be automated.

The research indicates that activities most vulnerable to automation include:

PHOTO: BILL WADMAN / IBM

Business/legal professionals, 600K

“AI is not going to replace managers, but managers who use AI will replace the managers who do not."

— Rob Thomas, IBM Senior Vice President

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Occupations

% of tasks % women Number more likely of Jobs, automated 2023

Office and administrative support occupations

Bookkeeping, accounting, and auditing clerks Customer service representatives Office clerks, general Secretaries and administrative assistants, except legal, medical, and executive

71%

71%

18,553,450

100% 86% 84% 78%

Business and financial operations occupations

86% 65% 81% 92%

1,501,910 2,858,710 2,496,370 1,785,430

Insurance underwriters Insurance claims and policy processing clerks Tax preparers

100% 100% 83%

44%

54%

10,087,830

Sales and related occupations

46%

49%

13,380,660

Legal occupations

49%

52%

1,240,630

Computer and mathematical occupations

45%

27%

5,177,400

Travel agents Securities, commodities, and financial services sales agents Sales representatives of services, except advertising, insurance, financial services, and travel Legal secretaries and administrative assistants Lawyers Paralegals and legal assistants

88% 80% 67% 88% 32% 58%

Database architects Data scientists Computer programmers

67% 66% 66%

57% 80% 66% 80% 25% 32% 96% 40% 83% n/d n/d 22%

101,310 241,650 81,650

58,250 479,630 1,142,020 152,790 731,340 354,890

59,920 192,710 120,370

PHOTO: MEANISM / RAWPIXEL.COM

Source: Brookings, Occupations with High Exposure and High Automation Potential.

• Physical activities in predictable, structured environments; • Data collection; • Data processing.

In terms of scale, McKinsey's midpoint scenario suggests that around 15% of the global workforce (approximately 400 million workers) could be displaced by automation between 2016 and 2030. However, this impact will vary significantly by country. In advanced economies with higher wages, such as France, Japan, and the United States, automation could affect 20 to 25% of the workforce by 2030.

Some examples of how automation is manifesting in the real world: • Amazon: Amazon uses AI-powered chatbots to handle customer service inquiries, reducing the workload on human representatives. Customer satisfaction grew as the corporation noted a notable drop in customer wait times.

• Bank of America: Bank of America's virtual assistant, Erica, uses AI to provide personalised financial advice, answer customer questions, and perform routine banking tasks. Having managed millions of consumer interactions, Erica has shown the potential for artificial intelligence in customer service.

• Tesla and General Motors: Both Tesla and General Motors are heavily investing in automation to improve manu-

facturing efficiency. Advanced robots and artificial intelligence enable Tesla's Nevada Gigafactory to produce electric vehicles at a high rate.

• Walmart and Target: Major retailers like Walmart and Target have implemented self-checkout systems to reduce labour costs and improve the customer experience. These systems allow customers to scan and pay for their items without cashier assistance.

The U.S. Bureau of Labor Statistics (BLS) has conducted extensive research on how automation affects certain sectors. Their study found that among the fastest-shrinking professions resulting from automation are personal financial advisors, interpreters, translators, radiologists, and many more. The BLS predicts that by 2029, fewer jobs will be available for these professions and others. Employees are encouraged to acquire new skills or take up different roles, as this shift may lead to significant job losses.

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Table 1. AI Impact by Sector Sector

Impact Level

Current Trend

Accommodation & Food Services High

Automated check-in, robotic cleaning, customer service bots

Increasing automation in routine tasks

Manufacturing High

Assembly line automation, quality control, inventory management

Significant cost reduction potential

Agriculture High

Drone monitoring, automated irrigation, robotic harvesters

Focus on precision farming

Transportation High

Autonomous vehicles, drone deliveries

Major investment in automation

Retail & Trade High

Self-checkout, automated inventory, AI chatbots

Customer experience optimization

Finance Medium

Risk assessment, fraud detection, automated trading

Enhanced analytics focus

Healthcare Medium

Diagnostic assistance, administrative automation

Hybrid human-AI approach

Education Medium

Assembly line automation, quality control, inventory management

Growing EdTech integration

INDUSTRIES TAKING AI ADOPTION SERIOUSLY

Rather than complete job elimination, most workers—from welders to mortgage brokers to CEOs—will work alongside increasingly capable machines. For example, at Amazon, workers who previously manually lifted and stacked objects are becoming robot operators, monitoring automated systems, and resolving issues. This shows that jobs are more likely to be redefined than to be removed completely.

The scatter plot next page, courtesy of the World Economic Forum, Future of Jobs Survey Report 2023, illustrates the correlation between two important business metrics in various industries: the likelihood that organisations surveyed will prioritise big data and AI skills training versus the likelihood that they will adopt AI technologies and pursue automation as a business strategy.

The data above shows a clear positive correlation between AI training investment and technology adoption across industries. Electronics and IT services lead in both metrics (around 80-100%), while sectors like accommodation, Food, and leisure lag behind (around 50-60%). This suggests that industries that prioritise AI skills training are also more likely to embrace technological automation, indicating a coordinated approach to digital transformation.

Other fields have demonstrated exceptional success in incorporating AI to complement rather than replace human talents. Healthcare professionals spearhead this adaptation: 56

Key Examples

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• AI helps nurse practitioners keep track of patients' information and treatment plans.

• Physician assistants use AI to handle prescriptions and plan treatments.

• Diagnostic tools driven by AI are used by healthcare teams to look at medical images and patient histories.

Similarly, social workers are adapting by using AI to make their main job easier. These days, case management solutions assist in effectively organising appointments and monitoring client development. Rapid analysis of client needs using resource identification systems helps to link them with suitable housing, healthcare, and financial aid programs.

Human resource professionals highlight effective artificial intelligence integration using: • AI-powered recruitment platforms evaluate resumes and conduct preliminary assessments.

• Algorithms on sites like LinkedIn and Indeed help job hunters match prospects.

• Coursera and Udacity, among other training sites, provide personalised skill development.

These changes improve job satisfaction and productivity by allowing professionals to focus on important tasks while AI handles routine duties.

AI AROUND THE WORLD

The global adoption of artificial intelligence reveals striking regional variations and implementation challenges. Based

WORLD ECONOMIC JOURNAL

100

Share of businesses which plan to adopt Al technologies (%)

Electronics Information and technology services 90 Energy technology and utilities

Media, entertainment and sports Financial services and capital markets Business support and premises maintenance services

Automotive and aerospace Research, design and business management services

80

Telecommunications

Medical and healthcare services Infrastructure

70

Chemical and advanced materials Education and training

Oil and gas Advanced manufactoring

Care, personal services and wellbeing Non-governmental and membership organisations

Production of consumer goods Government and public sector

Retail and wholesale of consumer goods

Agriculture, Forestry and Fishing

60

Insurance and pensions management

Employment services

Mining and metals

Supply chain and transportation Real estate

Accommodation, Food and Leisure 50 0

40

20

60

80

100

Share of businesses which plan to prioritise skills training in Al and big data (%) Share of businesses which plan to accelerate automation 60 to 70% 70 to 80% 80 to 90% 90 to 100%

How the US, Europe, and Asia Have Adopted AI The adoption of AI technologies has been uneven across different regions, influenced by factors such as economic conditions, technological infrastructure, and workforce readiness.

The United States maintains a strong position in AI development, with notable contrasts in implementation success.

PwC reports sectors using AI show productivity growth nearly five times higher than less exposed industries. Job postings for AI roles have surged 3.5 times faster than overall positions since 2016, while Accenture projects an additional $8.3 trillion in gross value added (GVA) by 2035.

Europe follows a distinct development path. IDC projects AI spending to reach $133 billion by 2028, growing at 30.3% annually. The market currently stands at $47.6 billion in 2024, representing one fifth of global AI activity.

Private investment in Al by geographic area, 2013-23 United States E uropean Union and United Kingdom China Total investment (in billions of U.S. dollars)

PHOTO: FLUKE / RAWPIXEL.COM

on a report by Stanford University, AI investments in the United States amounted to $67.2 billion in 2023, about 8.7 times more than those of China, the second-largest investor.

Private AI investment in China and the European Union, including the United Kingdom, dropped by 44.2% and 14.1%, respectively, since 2022, while the United States saw a significant growth of 22.1% over the same period.

80 67.22, US

70 60 50 40 30 20

11.00, EU

10

7.76 China

0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Source: Stanford University, 2024 AI Index Report.

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Startups Lead While Giants Follow Analysis of recent market data by PitchBook indicates that entrepreneurial ventures have been instrumental in driving AI market expansion, with venture capital deployment reaching $3.9 billion in Q3 2024 through 206 deals. U.S.-based startups captured 74.3% of this capital allocation ($2.9 billion across 127 deals), demonstrating the region's continued dominance in AI innovation.

Here are three notable AI startups that have spearheaded industry adoption: 1. OpenAI: OpenAI has been a pioneer in generative AI, including language models such as GPT and DALL-E. Their inventions have established a standard for AI capabilities, pushing corporations such as Microsoft to spend extensively and incorporate these technologies into their own platforms.

2. DeepMind: Known for its innovative AI research, DeepMind has made important contributions to healthcare through protein folding research. Their advances have prompted major pharmaceutical corporations to look into AI-powered solutions for drug research and development.

3. Databricks: Databricks has transformed data and AI infrastructure with its Lakehouse platform, which combines data warehousing, data engineering, data streaming, and data science. Databricks has helped companies such as J.P. Morgan Chase, McDonald's, and Unilever streamline operations, improve customer experiences, and drive innovation by providing a unified platform for data management and analysis.

The data reveals a distinct market pattern: enterprise adoption is fuelled by startup innovation, resulting in a self-sus-

"AI is not the end of jobs, but it may be the end of some jobs as we know them. It's our responsibility to educate, retrain, and prepare the workforce for the new jobs that AI will create."

— Sundar Pichai, CEO of Alphabet taining cycle of technological improvement and commercial deployment. This dynamic has created a market structure in which startups act as technology pioneers, while large companies provide the scale required for mainstream adoption and commercialisation.

Corporate AI Adoption Trends Large corporations demonstrate increasing commitment to AI implementation, with adoption rates jumping from 56% to 72% in 2024. This growing enthusiasm for AI technology is clearly reflected in corporate communications and earnings discussions.

There were 394 earnings calls in 2023 that talked about AI, which is almost 80% of all Fortune 500 companies. This is a big jump from the 266 calls that talked about AI in 2022. Since 2018, almost twice as many Fortune 500 earnings calls have talked about AI. At 19.7% of all earnings calls, generative AI was the most common theme that was cited.

Accenture projects that 63% of companies will strengthen their AI capabilities by 2026. Corporations should prioritise operational efficiency improvements while reducing costs through automation. Customer experience enhancement drives many initiatives, with revenue growth through AI implementation becoming a key strategic goal.

This creates a symbiotic relationship where startups pioneer innovations and large corporations provide scale. Success in-

Table 2. Regional AI Adoption Analysis Region

Adoption Rate

Key Metrics

United States High $8.3T in gross value added by 2035

58

Main Challenges

Implementation complexity, workforce adaptation

Europe Medium

$133B AI spending by 2028, 30.3% annual growth

Regulatory alignment, market fragmentation

Asia Varying

$90.7B AI spending by 2027, 28.9% annual growth

Skills readiness, infrastructure gaps

WEJ | February-March 2025

PHOTO: LUKASZ KOBUS / EUROPEAN UNION / CC BY 4.0

Asia exhibits a similarly dynamic environment across eight principal economies: Australia, India, Indonesia, Japan, South Korea, Malaysia, Singapore, and Taiwan. These markets show AI maturity but face distinct challenges in skills readiness and regulatory alignment. Countries like China are leading in integrating AI into various sectors, particularly manufacturing and technology. AI spending for Asia/Pacific is forecast to grow at an annual growth rate (CAGR) of 28.9% from 2022 to reach $90.7 billion by 2027. The region is also expected to see substantial job creation driven by AI innovations.

WORLD ECONOMIC JOURNAL

Number of Fortune 500 earnings calls mentioning Al, 2018-23

Number of earnings calls

400

394

300 200 100

0

2013

2019

2020

2021

2022

2023

Source: Stanford University, 2024 AI Index Report.

creasingly depends on bridging technological divides between advanced and emerging economies while maintaining innovation momentum across all sectors. The challenge lies not just in developing new AI capabilities but in ensuring their benefits spread equitably across the global economy.

PHOTO: FLUKE / RAWPIXEL.COM

CHALLENGES OF AI IMPLEMENTATION IN THE WORKPLACE

As AI disrupts contemporary workplaces with unprecedented speed and complexity, organisations must strike a delicate balance between maximising its potential and managing the human implications of this technological shift. From workforce adaptation issues to serious ethical concerns, the integration of AI into professional contexts provides an array of possibilities that needs careful analysis and strategic planning.

Workforce Adaptation and the Skills Gap AI's expanding influence includes cognitive and creative tasks, which were previously considered secure, as indicated by the Organisation for Economic Co-operation and Development's (OECD) research. This affects industries including finance, insurance, and technology, where algorithmic management is progressively supervising staff performance and work operations. Training programs today have to cover technical skills as well as adaptation to AI-supervised workflows.

Established companies have created all-encompassing strategies to handle skill transitions. Google's Apprenticeship Program sets an example by providing specific programs in Data Analytics, Digital Marketing, and Information Technology. Boeing's Technical Apprenticeship Program (BTAP) exemplifies the importance of industry collaboration by providing mentorship and practical experience in emerging technologies.

According to Accenture's research, in some sectors, artificial intelligence could boost labour productivity by up to

40%, fundamentally altering how white-collar professionals perform their daily work. The International Labour Organisation stresses that this won't just get rid of jobs entirely but will change them, requiring individuals to learn new skills to work alongside artificial intelligence.

"In the future, I believe we will see more collaboration between humans and AI, with machines taking on tasks that are repetitive and mundane, freeing humans to focus on problem-solving, creativity, and empathy."

— Fei-Fei Li, Co-Director of Stanford Institute for Human-Centered Artificial Intelligence (HAI) Ethics in the Use of Artificial Intelligence IBM's framework for ethical AI identifies three critical issues that need attention: 1. Data Responsibility and Privacy: Implementing strong governance processes and compliance measures.

2. Fairness and Transparency: Creating bias-free algorithms with explainable outcomes.

3. Accountability and trust: Establishing defined responsibilities and audit methods.

The ethical consequences go beyond individual companies. AI systems learn from historical data, which may have embedded biases that, if not addressed, might perpetuate prejudice. This necessitates continual monitoring and modification to achieve equitable outcomes for all populations.

Organisations should consider implementing: • Strong privacy practices and data anonymisation techniques; • Informed consent methods for data collection and use; • Clear guidelines for AI development and deployment; • Regular monitoring and compliance methods.

This transformation necessitates careful management to maintain an equitable allocation of possibilities. The ongoing dialogue among technologists, ethicists, and legislators is criti59

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60

Analytical thinking

50 Creative thinking

Core skill for workers in 2023 (%)

Motivation and self-awareness 40

Resilience, flexibility and agility

Curiosity and lifelong learning Technological literacy Dependability and attention to detail Empathy and active listening Quality control Leadership and social influence Systems thinking Talent management Service orientation and customer service Reading, writing and Resource management and mathematics operations Al and big data

30

20

Multi-lingualism Programming 10

Design and user experience

Teaching and mentoring

Marketing and media Environmental stewardship Manual dexterity, endurance and precision

Global citizenship Sensory-processing abilities 0 0

10

20

30

40

50

60

70

Reskilling focus, 2023-2027 (%) Cognitive skills

Technology skills

Engagement skills

Ethics

Management skills

Physical abilities

Self-efficacy

Working with others

cal for defining rules for ethical AI deployment while protecting individual rights and promoting equitable opportunity.

"The ethical challenge of AI is to ensure that it serves humanity as a whole, not just a privileged few. This requires a human-centred approach that respects human dignity, human rights, and fundamental freedoms."

— UNESCO Recommendation on the Ethics of Artificial Intelligence

PREPARING FOR TOMORROW'S WORKPLACE

AI's evolution of the workplace brings with it both opportunities and pressures for adaptation. While McKinsey forecasts that 60% to 70% of present employee duties might be automated, the World Economic Forum predicts that 97 million new jobs would emerge by 2025. The simultaneous displacement and creation of jobs indicates a fundamental shift in how we operate.

The World Economic Forum's Future of Jobs Report emphasises the value of upskilling and reskilling. It asserts that organisations must address the widening skills gap caused by technological adoption and disruption. The report underlines the importance of personalised, integrated, hybrid, and lifelong learning. It also notes that the skill sets required for modern jobs have changed dramatically and are projected to evolve further.

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Businesses can use AI to create jobs by investing in technology that improves productivity and upskills their employees.

Companies that use AI-driven analytics, for example, might streamline processes and create positions dedicated to analysing data insights rather than manual data processing.

In this day and age, it is imperative to develop skills that are resistant to automation. Critical thinking, creativity, and emotional intelligence are particularly valuable. Success necessitates keeping up with technical improvements while developing distinctly human talents.

That being said, it is imperative that all parties are involved in this change. Companies, especially, must foster a culture of constant learning while adapting their business models. Government assistance is critical through targeted training programs and statutory protection for displaced workers. Companies gain from investing in employee development, which helps employees adapt to changing technology and processes.

These advances point to a future workplace in which human expertise and AI capabilities complement one another. As people and institutions adjust to these changes, the emphasis switches from displacement concerns to optimisation potential.

Preparing for tomorrow's workplace necessitates a collaborative effort from individuals, organisations, and governments.

With adequate planning and assistance, the AI transition can generate more opportunities than it destroys, resulting in a more productive and inclusive workplace.

PHOTO: FLUKE / RAWPIXEL.COM

Source: World Economic Forum, Future of Jobs Survey Report 2023.

[ TECHNOLOGY ]

HOW SustainaNet AITE IS TRANSFORMING SUSTAINABLE DEVELOPMENT

By World Economic Journal Editor-in-Chief Robert Abdullah

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PHOTO: TZIDO SUN / SHUTTERSTOCK

ARTIFICIAL INTELLIGENCE AND ESG:

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INTRODUCTION

In today’s world, sustainable development is no longer just a trend—it has become a strategic necessity for businesses and government institutions. Environmental, Social, and Governance (ESG) factors now play a central role in determining a company’s investment appeal, regulatory compliance, and global reputation. In 2024, the European Union and other international organizations significantly strengthened ESG reporting requirements, compelling companies to seek advanced technological solutions for automating ESG analysis and reporting.

SustainaNet AITE is a next-generation AI-powered ESG analytics platform designed to automate monitoring, analysis, and sustainability forecasting for businesses and public administration. After several years of development and testing, the project has officially become part of the International Research Consortium Global Initiative for Sustainable Development of Territorial Entities (GITE IRC) and has been established as its key technological initiative.

GITE has been recognized by the United Nations as an SDG Good Practices, underscoring its significance in advancing cutting-edge solutions for sustainable development. This decision reflects the consortium’s strategic focus on advancing AI-driven ESG analytics and the automation of sustainable development processes. GITE IRC now oversees the project’s management, scaling, and integration into global ESG initiatives, ensuring alignment with international sustainability standards and active collaboration with the United Nations and other global organizations.

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THE EVOLUTION OF ESG REPORTING ESG reporting began taking shape in the late 1990s, as investors increasingly focused on non-financial performance indicators of companies. Several key milestones have shaped the development and standardization of ESG reporting over the past decades:

1997

2004

The Kyoto Protocol is introduced, establishing the first legally binding international commitments to reduce CO₂ emissions

The Who Cares Wins report, developed under a UN initiative, highlights the importance of integrating environmental, social, and governance factors into investment decisions

2006

2011

20202024

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1999

The Global Reporting Initiative (GRI) publishes its first Sustainability Reporting Guidelines, marking a significant step toward standardizing non-financial reporting

The Sustainability Accounting Standards Board (SASB) is established to develop industry-specific ESG disclosure standards, improving the consistency of corporate sustainability reporting

ESG regulations intensify worldwide, including the Corporate Sustainability Reporting Directive (CSRD) in the EU, the SEC Climate Disclosure Rules in the U.S., and national ESG policies in China and Japan

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The Principles for Responsible Investment (PRI) are launched and endorsed by the United Nations, encouraging investors to incorporate ESG criteria into their strategies

2015

The UN Sustainable Development Goals (SDGs) are adopted, setting a global framework for ESG-related policies and initiatives

These milestones have fundamentally reshaped corporate reporting, driving the integration of ESG metrics into business strategies and increasing transparency in corporate sustainability efforts.

The increasing complexity of ESG compliance and reporting highlights the need for AI-driven automation and predictive analytics. In the following sections, we will explore how AI is revolutionizing ESG analytics, enabling organizations to comply with evolving regulations, mitigate sustainability risks, and enhance strategic decision-making.

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THE GLOBAL ESG LANDSCAPE AND KEY CHALLENGES The Growing Importance of ESG In recent years, Environmental, Social, and Governance (ESG) factors have evolved from a corporate trend into a fundamental component of strategic decision-making.

The increasing regulatory pressure, the rapid expansion of ESG-focused investments, and the growing influence of sustainability metrics on corporate competitiveness are driving businesses to adopt advanced analytical tools and automation technologies.

As sustainability reporting becomes a global standard, companies across industries face significant challenges in ESG data collection, processing, and reporting. Addressing these challenges effectively requires AI-driven automation, predictive analytics, and seamless integration with regulatory frameworks.

PHOTO: BOY ANTHONY / SHUTTERSTOCK

1. The Regulatory Landscape: Stricter ESG Disclosure Requirements Governments and regulatory bodies worldwide are imposing stricter ESG disclosure requirements, making comprehensive sustainability reporting mandatory for companies of all sizes.

• European Union: The Corporate Sustainability Reporting Directive (CSRD), effective in 2024, mandates 50,000+ companies to publish detailed ESG reports, including non-financial disclosures and supply chain impact assessments.

• United States: The Securities and Exchange Commission (SEC) has introduced stringent ESG disclosure rules affecting 4,000+ publicly traded companies to enhance transparency for investors.

• China: Since 2023, state-owned enterprises and major private corporations have been required to report on sustainability and carbon footprint reduction measures.

• Japan: Since 2022, all companies listed on the Nikkei 225 index must include ESG metrics in their corporate disclosures.

As global sustainability standards become more rigorous, companies that fail to comply risk losing investor confidence, facing regulatory fines, and falling behind competitors that integrate ESG into their corporate strategy.

2. The Rise of ESG Investments Financial markets increasingly prioritize ESG performance, making accurate and transparent sustainability reporting a critical requirement for securing funding and maintaining investor trust.

•A ccording to Bloomberg Intelligence, global ESG assets under management (AUM) stood at $35 trillion and are projected to reach $50 trillion by 2025.

•E SG criteria are now fundamental in credit risk assessment, influencing banks and investment funds when issuing loans or evaluating companies.

•M ajor rating agencies increasingly incorporate ESG factors into their corporate credit scores, impacting market valuation and financing opportunities.

As investors demand greater ESG transparency, companies must implement data-driven solutions to provide verifiable, standardized, and high-accuracy sustainability reports.

3. The Challenges of ESG Data Management Despite the growing importance of ESG, many organizations struggle with data accuracy, standardization, and predictive analysis.

• 6 8% of companies face difficulties in measuring and calculating carbon footprints.

• 4 0% of businesses report a lack of proper analytical tools for effective ESG monitoring.

• Th e absence of harmonized global reporting standards (GRI, SASB, TCFD, CSRD) makes cross-market data comparison challenging.

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As a result, investors, regulatory bodies, and corporate decision-makers struggle to extract actionable insights from fragmented ESG datasets. Without automated, AI-driven solutions, sustainability reporting remains an expensive, labor-intensive, and highly inconsistent process.

4. ESG and Corporate Competitiveness Companies with strong ESG ratings experience measurable business benefits: •H igher investment inflows from institutional and ESG-focused investors.

•T ax incentives and financial benefits tied to sustainable operations.

• S tronger positioning in public procurement and government contracts, where sustainability criteria are now included.

• I mproved global reputation, essential for businesses operating in international markets.

These factors highlight the urgent need for advanced ESG data solutions that can streamline compliance, enhance risk management, and unlock growth opportunities.

This evolving landscape underscores the critical role of AI-driven platforms in ESG. Companies that adopt automated, intelligent ESG solutions will gain a competitive edge, ensuring regulatory compliance, improved investment attractiveness, and enhanced operational efficiency.

In the next section, we will explore how AI is transforming ESG analytics and enabling companies to navigate this new reality effectively.

THE ROLE OF ARTIFICIAL INTELLIGENCE IN ESG

As ESG regulations tighten and investors demand higher transparency, businesses face an urgent need to streamline ESG reporting, enhance predictive analytics, and prevent greenwashing. Artificial intelligence (AI) has emerged as a transformational force in ESG, offering automated solutions that reduce reporting costs, improve data accuracy, and drive sustainability strategies.

1. AI-Driven ESG Risk Prediction Traditional ESG risk assessments rely on manual data collection and static historical analysis, which often fails to identify emerging sustainability risks in real time. AI changes this paradigm by: •A nalyzing thousands of ESG indicators to predict potential compliance violations, environmental fines, and supply chain disruptions.

•D etecting early warning signals by monitoring news, financial disclosures, and market sentiment, flagging ESG risks before they escalate.

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Companies that adopt automated, intelligent ESG solutions will gain a competitive edge, ensuring regulatory compliance, improved investment attractiveness, and enhanced operational efficiency •M odeling long-term sustainability scenarios, helping businesses adjust their ESG strategies in response to regulatory changes and investor expectations.

For example, AI-powered climate risk models enable companies to forecast carbon footprint trends and proactively adapt their operations to upcoming emissions regulations.

2. Automating ESG Reporting and Compliance One of the most resource-intensive aspects of ESG management is regulatory compliance. AI-driven platforms like SustainaNet AITE reduce ESG reporting efforts by up to 75%, enabling: •A utomated data integration – AI collects ESG data from corporate ERP systems, regulatory databases, and real-time environmental monitoring tools, eliminating manual entry errors.

•R eal-time compliance tracking – AI ensures that reports adhere to evolving frameworks such as GRI, SASB, TCFD, and CSRD, reducing the risk of non-compliance.

•M ulti-standard report generation – AI systems can instantly generate customized sustainability reports tailored for different investors, regulators, and industry requirements.

This automation allows companies to shift focus from compliance management to proactive ESG strategy execution.

3. AI-Powered Fraud Detection: Combating Greenwashing Greenwashing—the practice of misleading stakeholders about a company's environmental impact—has become a major concern for regulators and investors. AI helps counteract this issue by:

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•C ross-checking reported ESG data with independent sources to identify inconsistencies.

•D etecting anomalies in corporate sustainability claims, ensuring that companies do not manipulate emissions or social impact figures.

•A nalyzing supply chain data to prevent companies from outsourcing environmental damage to third parties.

AI-powered fraud detection is a game-changer for ensuring that ESG disclosures remain credible, verifiable, and free from manipulation.

PHOTO: CHAYANUPHOL / SHUTTERSTOCK

4. AI-Driven Personalized ESG Strategies Beyond compliance, AI enables businesses to proactively enhance their sustainability performance. By analyzing industry trends, competitor benchmarks, and regulatory landscapes, AI can: •R ecommend ESG optimization strategies tailored to a company’s specific industry and geographic location.

• I dentify cost-effective sustainability improvements, such as energy efficiency initiatives or carbon offset programs.

• S imulate the financial impact of various ESG initiatives, helping executives prioritize investments in sustainability.

Instead of treating ESG as a regulatory burden, companies that leverage AI-driven insights can turn sustainability into a competitive advantage.

AI IN ESG: FROM DATA COLLECTION TO STRATEGIC DECISION-MAKING

The integration of AI in ESG goes beyond automation—it fundamentally redefines how businesses approach sustainability. Companies that embrace AI-driven ESG solutions can: •R educe compliance costs while improving reporting accuracy.

• S trengthen their investment attractiveness by ensuring verifiable ESG claims.

•G ain a competitive edge by proactively identifying and mitigating sustainability risks.

In the final section, we will explore the future of ESG analytics, the role of emerging technologies like IoT and blockchain, and how SustainaNet AITE is shaping the next generation of ESG solutions.

Technological advancements and the increasing regulatory pressure on ESG make process automation inevitable.

Companies that adopt intelligent ESG analytics solutions gain a competitive edge by reducing costs, improving reporting accuracy, and ensuring data transparency. SustainaNet AITE is precisely such a solution—integrating advanced AI technology and automated monitoring to transform the ESG analytics market. Let’s explore how this platform addresses key ESG challenges and what opportunities it unlocks for businesses and government institutions.

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THE FUTURE OF ESG ANALYTICS AND THE ROLE OF SUSTAINANET AITE

As ESG reporting evolves, businesses are increasingly turning to cutting-edge technologies to ensure compliance, enhance transparency, and gain strategic insights.

The next phase of ESG analytics will be shaped by IoT-powered real-time data collection, blockchain-based transparency, and AI-driven predictive modeling. SustainaNet AITE is at the forefront of this transformation, providing a scalable, AI-powered ESG intelligence platform that aligns with the rapidly changing regulatory and investment landscape.

1. The Future of ESG Analytics: Key Technological Shifts To meet 2025–2030 sustainability goals, companies will need to integrate advanced data solutions into their ESG strategies.

IoT Integration for ESG Monitoring •R eal-time environmental tracking – IoT sensors collect instantaneous data on emissions, energy usage, and water consumption, reducing reliance on outdated manual reporting.

•A utomated compliance monitoring – IoT-enabled systems detect regulatory violations in real time, helping companies stay ahead of tightening ESG policies.

Blockchain for ESG Transparency • I mmutable ESG records – Blockchain-based ledgers store tamper-proof ESG data, preventing corporate greenwashing and ensuring accountability.

• S upply chain sustainability verification – Blockchain enhances traceability of sustainable sourcing, allowing

companies to certify ethical labor practices and carbon neutrality claims.

AI-Driven ESG Forecasting •P redictive risk assessment – AI-powered models analyze global sustainability trends to anticipate emerging ESG risks, allowing businesses to adapt in advance.

•R eal-time scenario modeling – AI simulates the longterm impact of sustainability initiatives, helping executives make data-driven investment decisions.

These innovations are rapidly redefining ESG analytics, making sustainability management more efficient, transparent, and actionable.

2. SustainaNet AITE: A Next-Generation ESG Intelligence Platform SustainaNet AITE is designed to revolutionize ESG analytics by integrating AI, IoT, and blockchain into a single, powerful platform. It offers: •E nd-to-End ESG Data Automation – AI-driven data integration eliminates manual reporting inefficiencies, ensuring seamless regulatory compliance.

•D eep AI-Driven Insights – The platform analyzes 500+ ESG indicators, offering real-time risk prediction and impact analysis.

•C omprehensive ESG Compliance Management – SustainaNet AITE generates customized reports that meet GRI, SASB, TCFD, and CSRD standards.

Unlike traditional ESG reporting tools, SustainaNet AITE is built for real-time compliance, predictive risk management, and seamless regulatory adaptation.

SUSTAINANET AITE VS. OTHER ESG SOLUTIONS

68

Feature

SustainaNet AITE

Workiva

Novisto

AUTOMATED DATA COLLECTION

Full ERP & IoT Integration

Partial

AI-POWERED RISK ANALYSIS





Advanced AI Analytics

Basic Models

REGULATORY COMPLIANCE SUPPORT











Full Compliance

Compliant

Compliant

Compliant

Compliant

GOVERNMENT INTEGRATION











Supports B2G & Public Sector

No B2G

No B2G

No B2G

No B2G



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Enablon

IBM ESG Solutions

Limited ERP

Requires Manual Entry

Advanced





Limited AI

Minimal AI Functionality

Strong Modeling





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3. The Growing Demand for AI-Driven ESG Solutions

PHOTO: NUTTAPONG PUNNA / SHUTTERSTOCK

As ESG disclosure rules become mandatory for most corporations by 2030, the market for AI-powered sustainability analytics is expected to surge.

•A ccording to Verdantix, the ESG analytics market will grow from €1.3 billion in 2023 to €5.6 billion by 2029.

•M ore than 50,000 companies in the EU alone will be required to implement CSRD-compliant ESG reporting.

•n stitutional investors are increasingly prioritizing AI-powered ESG analytics, demanding higher data accuracy and real-time risk insights.

4. SustainaNet AITE: Defining the Future of ESG Management By combining AI, IoT, and blockchain into a unified platform, SustainaNet AITE is setting a new benchmark for ESG analytics. The platform is designed to: •E nsure full regulatory compliance with evolving ESG standards.

•E liminate inefficiencies in ESG reporting through AI-driven automation.

•P rovide unmatched risk visibility through predictive ESG intelligence.

• S upport governments and enterprises in scaling sustainability initiatives.

SustainaNet AITE is at the forefront of this transformation, providing a scalable, AI-powered ESG intelligence platform that aligns with the rapidly changing regulatory and investment landscape CONCLUSION: A NEW STANDARD IN ESG INTELLIGENCE

SustainaNet AITE is more than just an ESG tool—it is a strategic innovation that transforms sustainability reporting into a competitive advantage. Recognized by the United Nations as an SDG Good Practices, the platform is poised to redefine global ESG compliance, investment analytics, and corporate sustainability strategies.

As AI-driven ESG analytics become the new standard, SustainaNet AITE is leading the charge—helping businesses, governments, and investors shape a more sustainable and resilient global economy.

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KYRGYZSTAN AND CENTRAL ASIA:

GROWTH POINTS AND OPPORTUNITIES PHOTO: EVGENYKZ, VLADIMIR GONCHARENKO / SHUTTERSTOCK

By Tana Harina

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PHOTO: RINAT T / UNSPLASH; SERGEY ZUENOK / SHUTTERSTOCK

C

entral Asia is experiencing a new stage of development. Historically, the region has been dependent on the export of raw materials, which has made it vulnerable to fluctuations in world prices for oil, gas, metals, and other resources. In response, countries in the region have begun to look for ways to diversify their economies.

Kazakhstan is emphasizing the development of the IT sector and renewable energy. Uzbekistan aims to become a center for manufacturing and trade. Kyrgyzstan is also developing tourism, agriculture, and hydropower.

However, Central Asia's economic growth also faces serious challenges. One of the main challenges is climate change. For example, melting glaciers in Kyrgyzstan's mountains threaten the stability of agriculture and hydropower. Geopolitical instability is also putting pressure on the region's economy.

Sanctions against Russia, a major trading partner, and ongoing instability in neighboring Afghanistan add further risks.

Nevertheless, these challenges also present new opportunities. Sanctions against Russia are forcing European countries to look for alternatives, and Central Asia is becoming an important link in the supply chain. The “One Belt, One Road” export corridor, which links Europe, China, and the Middle East, has taken on a special significance. Central Asia now has the opportunity to reduce dependence on individual countries and strengthen economic cooperation with different partners.

Green energy is one of the most promising areas for growth in the region. Kazakhstan and Kyrgyzstan are already investing in hydroelectric, solar, and wind power plants, allowing the regions to reduce dependence on hydrocarbons and create conditions for exporting clean energy.

In addition, international organizations play a significant role in addressing the region's climate challenges. The World Bank and UNDP (United Nations Development Programme) actively support climate change adaptation projects in Central Asia, which helps the countries of the region cope with the effects of melting glaciers and other environmental challenges.

Central Asia has significant potential for sustainable development. The region is actively seeking new avenues of growth, 71

[ ANALYTICS ]

international ties, and the transition to sustainable energy are already beginning to yield early results. It is important to understand which growth points can take the region to the next level and ensure its resilience to global challenges.

GROWTH POINTS IN THE REGION

Economic diversification, strengthening international ties, and the transition to sustainable energy are already beginning to yield early results developing new industries, and strengthening international ties. New opportunities lie ahead for Central Asia that can lead to long-term economic prosperity.

Today, Central Asia is not just looking for solutions to its problems but is also actively seizing unique opportunities for development. Economic diversification, strengthening

The geographical layout allows Central Asia to focus on the development of key economic sectors such as energy, logistics, IT, and agriculture.

One of the key and strategically critical sectors is energy.

Parts of the region (Kazakhstan, Turkmenistan, and Uzbekistan) are rich in various natural resources such as oil, gas, and coal. The countries in the region have total oil reserves of 15-31 billion barrels and total natural gas reserves of 230-360 trillion cubic meters. Meanwhile, the rest of the region (Kyrgyzstan and Tajikistan) is focused on hydropower. This mixed energy system is economically efficient. Kyrgyzstan, for example, has 30% of the region's water resources. The country not only covers its domestic energy needs but also develops exports.

According to a report by the Asian Development Bank, the region's energy demand will grow by 32% by 2030. Therefore, Central Asia is interesting as a source of raw materials and energy. International communities and countries are paying attention to the potential of Central Asia and launching projects aimed at developing the region. One of the most prominent energy projects is CASA-1000 (Central Asia South Asia Electricity Transmission and Trade Project). The World Bank supports it and aims to build infrastructure that allows the export of surplus electricity from some Central Asian countries to Afghanistan and Pakistan. Thus, the project stimulates energy development in Central Asia.

Major trade routes that connect Europe and Asia pass through Central Asia. This strategic location allows the region to develop logistics. The volume of transportation has increased significantly over the past five years. And Kyrgyzstan accounts for the majority of logistics chains. Trade flow between the countries is growing due to the development of international road transportation, which complements transportation by rail.

The revival of the Silk Road in the Belt and Road initiative allows Central Asia to develop transport infrastructure and

Country

2021

2022

2023

2024е

2025f

2026f

Kazakhstan Kyrgyzstan Uzbekistan Tajikistan

4,3 5,5 8,0 9,4

3,2 9,0 6,0 8,0

5,1 6,2 6,3 8,3

3,4 5,8 6,0 7,2

4,7 4,5 5,8 5,5

3,5 4,5 5,9 5,0

Note: e - estimate, f - forecast. World Bank data

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PHOTO: CASA-1000

Real GDP growth (%) at market prices in Central Asia, 2021-2026

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Priority areas for the Central Asia economy POWER ENGINEERING

Development of oil and gas resources and hydropower to increse the energy potential of the region.

PHOTO: WORLD BANK

"The region is well endowed in natural resources, and each country has the potential to significantly increase investments in domestic sources of renewable energy—whether solar, wind, geothermal, bio-energy or green hydrogen—which will contribute to energy security," said Stephanie Gil, Practice Manager for Europe and Central Asia in the World Bank’s Energy and Extractives Global Practice. upgrade roads and rail networks. The region still faces difficult logistics and transport inaccessibility with some countries, such as India, which prevents transportation from being cheaper and increases trade volumes. However, some Central Asian countries, such as Kyrgyzstan, are establishing trade and logistics centers to address such problems.

Another initiative in this sector was the Uzbek-Kyrgyz cross-border trade platform. This is a prime example of how the region has introduced digital technologies in logistics development. The platform optimizes trade routes and simplifies customs processes, which helps increase the flow of goods between the countries.

And speaking of digitalization, another driver of Central Asia's growth is the IT industry. Kazakhstan, Kyrgyzstan, and Uzbekistan are creating their own technology parks and IT hubs, which are attracting more investment in the sector. A growing number of startups are appearing, digitalization is increasing, and IT solutions are being introduced into various areas of the economy. Kazakhstan, Kyrgyzstan, and Uzbekistan are launching university programs in programming, AI, and cybersecurity, which is contributing to an increase in IT experts.

Central Asian countries were among the first to recognize the potential of artificial intelligence technology. For example, the President of Kazakhstan, Kassym-Jomart Tokayev, urged the country's specialists to use all the possibilities of AI. This technology is already being integrated into many areas of activity, such as digital government, fintech, agriculture, healthcare, and transportation.

“I think that the use of AI technologies in Kazakhstan has significant potential to ensure GDP growth by increasing productivity, improving the quality of products and services, developing new industries, and effective resource management. Research work is being carried out in research institutes

IT

Establishing science and technology parks and starups to stimulate digitalization and boos IT services expo

LOGISTICS

Infrastructure upgrading and international transport route expansion to improve trade flows.

AGRICULTURE

Increasing agricultural production and exports through digitalization and innovative agrotechnologies.

and universities. Many grants are allocated by the government for IT development”, emphasizes Asel Abdildayeva, PhD, associate professor.

IT outsourcing is also becoming a priority for the region.

The High Technology Park of Kyrgyzstan (HTP) has become a national success story. The project supports IT startups through tax incentives and access to international markets.

Another Kyrgyz IT services project was Taza Koom. This initiative makes online services for the population more convenient. By the way, the Taza Koom project is supported by the UNDP and the World Bank. This also shows that international society believes in the IT potential of Central Asia.

In 2023 only, Kyrgyzstan was able to realize $10 million through the export of IT services. Meanwhile, Kazakhstan's IT exports grew by 40% over the same period. Overall, the services sector in Central Asia will reach almost 300 billion dollars in 2024.

Agriculture is another important area of economic development in Central Asia. Its share in the region's GDP is about 20%. If we look at some economies, in Kyrgyzstan and Tajikistan, this figure is above 20%, and in Kazakhstan, it is 4.5%.

In general, Central Asia relies on agriculture. Its countries are gradually moving away from growing only traditional crops such as wheat, barley, and millet. Uzbekistan, for example, is developing the production and export of fruits and vegetables.

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In addition, the government of Uzbekistan, together with the UN and the World Bank, has launched the AgroDigital project. This is an ideal example of how digital technologies are applied in agriculture. The online platform helps local farmers with planning, efficient resource use, and access to markets and supply chains. With this platform, they can also analyze soil conditions, check the weather in real-time, and more.

It’s worth highlighting that large organizations and countries are actively investing in the development of Central Asia.

Key areas of mutual capital investments in Central Asia, according to EDB data

21,4 31,7 Raw materials industry Manufacturing industry

FOCUS ON KYRGYZSTAN

Financial services

21,9

Other industries

25

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According to EDB data, last year alone, direct investment in the region amounted to more than $1 billion. The distribution of investments in the region in 2023 was largely focused on raw materials, manufacturing, and financial services. Specifically, 31.7% of all mutual investments were directed to primary industries, 25% to manufacturing, and 21.9% to financial services.

Overall, Central Asia is actively developing its priority sectors. And digital transformation is behind it all. The region is competently implementing and using digital solutions to overcome the barriers of geographical location and insufficient infrastructure. The development of IT technologies directly affects the development of other priority areas of the Central Asian economy. And vice versa, further growth of key industries stimulates the countries to further develop the IT direction.

One of the most striking examples of successful attempts to develop these key areas is Kyrgyzstan. The country is actively innovating and strategically developing various sectors, from information technology to agriculture and energy. Kyrgyzstan is making significant progress in strengthening its economic base and improving its infrastructure. The steps the country is taking now allow it to become an important player in the context of Central Asia's growth.

Kyrgyzstan's economy is set to grow by 8.1% in 2024, according to the World Bank. The country's economy shows positive changes, mainly due to the growth of exports, consumption, and investment. This year, exports increased by 28.2%, amounting to 2.8 billion dollars. Gold remains the key raw material for export: 50% of the total.

In the first six months only, Kyrgyzstan exported more than $1 billion worth of gold, of which 11 tons were shipped to the UK for $870.5 million, 1.8 tons to China for $129.4 million,

PHOTO: VLADIMIR PIROGOV / SHUTTERSTOCK

Alpine Kumtor gold deposit. Plateau Kumtor, Issyk-Kul region, Kyrgyzstan

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971.4 kg to Switzerland for $63.5 million and 13.5 kg to the UAE for $881,900, according to the Kyrgyz government.

This shows that Kyrgyzstan is still highly dependent on gold and other natural resources, which do not allow the country to fully diversify its economy.

However, it is interesting that some sectors where Kyrgyzstan can achieve sustainable development also saw growth.

In agriculture, output growth amounted to 3.3%. Domestic investment grew by 52.1% and external investment by 69.6%.

This year, the volume of investments in the IT sector of Kyrgyzstan especially increased. The country continues to actively cooperate with international organizations to implement projects in the field of digitalization.

Nevertheless, Kyrgyzstan's economy continues to depend on foreign trade. The budget deficit, limited domestic resources, and geopolitical instability create additional pressures on the country's economy. Russia and China are important trading partners of Kyrgyzstan, so fluctuations in the economies of these two countries negatively affect Kyrgyzstan. Kyrgyzstan has a rather strategic location, being in between the major economic centers of Eurasia. Therefore, diversification and a focus on new areas such as IT, agribusiness, logistics, and green energy are necessary to stabilize the economic situation in Kyrgyzstan. Special attention should be paid to investments in infrastructure and logistics to stimulate international trade.

Hydropower remains an essential attraction for investors.

Kyrgyzstan has all the resources to produce, develop, and export clean and cheap energy. Organizations such as the World Bank and the Asian Development Bank (ADB) are actively investing in Kyrgyzstan's “green” energy sector, helping the country modernize facilities and more.

For example, $500 million from international organizations and private investors has been directed to the Naryn River hydropower project. In addition, a significant part of investments is directed to solar and wind energy.

Investors are also paying attention to the IT sector of Kyrgyzstan. The government has created a favorable ground for the development of new projects and startups in the industry, thanks to the introduction of various preferential tax programs and educational projects. In 2024, Kyrgyzstan's investment in the IT sector has been growing. According to the World Bank, the volume of foreign direct investment in the digital technology sector for 2023 amounted to about $12 million, which is 1.5 times more than in 2020.

Important projects were AgroDigital and E-Gov. The first one is aimed at using new digital technologies in agriculture to improve its efficiency. And the second one is aimed at digitalization of public services.

In recent years, the agricultural sector has attracted significant investment, with agrotechnologies becoming particularly promising. Kyrgyzstan has attracted more than 100 million dollars of foreign direct investment in the agricultural sector by 25%. Key areas are the development of infrastructure for

Kyrgyz gold exports by country in 2024 United Kingdom

China

Switzerland

Export income (2024), $ 0

200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000

Export and investment growth rates of Kyrgyzstan in 2024, World Bank data Growth, % 80

60

40

20

0

Export growth

Domestic investments Foreign investments

crop storage and processing, as well as the application of innovative solutions to increase yields and adapt to climate change.

The United Nations Development Programme (UNDP) is actively involved in the development of digitalization and implementation of IT-technologies in various fields in Kyrgyzstan. One of the latest initiatives was e-commerce. Experts noted the importance of IT innovations in the development of e-commerce.

One prominent example is the introduction of precision farming technology based on the use of sensors and monitoring systems to optimize irrigation, fertilization, and pest control. In 2024, foreign companies have invested more than $40 million in modernizing agricultural infrastructure.

International cooperation plays a key role in supporting Kyrgyzstan's economy. Organizations such as the United Nations 75

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(UN), the World Bank (WB), the European Bank for Reconstruction and Development (EBRD), and the Asian Development Bank (ADB) have paid attention to the country. Together, they address systemic economic and social problems such as poverty, infrastructure improvement, human capital development, and support for small and medium-sized businesses.

The UN implements sustainable development programs and covers environmental issues, gender inequality and inclusive economic growth. For example, UNDP focuses on initiatives to adapt to climate change and modernize the agricultural sector, which remains the main source of employment in Kyrgyzstan.

Meanwhile, the World Bank is investing in infrastructure projects, in addition to health and education projects. Last year, the World Bank launched several programs, including financing for energy sector modernization and improving water resources for irrigation.

The EBRD has also taken an interest in Kyrgyzstan's energy sector, focusing on supporting the private sector in financial services and renewable energy development. The Bank is financing programs aimed at expanding exports and integrating Kyrgyzstan into international trade chains.

Speaking of trade chains, ADB is allocating funds to modernize transport infrastructure and introduce digital technologies. These initiatives are particularly important for improving logistics in Kyrgyzstan.

Indeed, it can be concluded that positive trends of sustainable development are coming in the country and in the whole region. Nevertheless, both Kyrgyzstan and Central Asia face risks that may hinder this development. Climate change, geopolitical instability and economic shifts in global and regional politics could have a significant impact on the future growth of the country's economy and the region as a whole.

“Digital transformation is a key factor for the development of e-commerce, which in turn creates jobs, develops businesses, and supports sustainable economic growth. UNDP is committed to ensuring that the digital transformation process in Kyrgyzstan leaves no one behind, with a special focus on youth, women, rural communities, and people with disabilities,” said Alexandra Solovieva, UNDP Resident Representative.

RISKS AND PROSPECTS

The main risks facing Central Asia, including Kyrgyzstan, are climate change, geopolitical instability in the world and economic shifts. All of these hinder the sustainable development of the region. Charles Cormier, World Bank Regional Director for Infrastructure in Europe and Central Asia, once stated in a report that countries in the region must significantly increase their share of clean energy (up to 75% by 2060) and intensify efforts to decarbonize the industrial and transport sectors.

“This will only be possible with binding national commitments, targeted measures and investments”, he said. The message of his statement is a simple truth: one must act now and immediately.

A pressing issue for Central Asia is climate change. Over the past decades, temperatures in the region have increased by 1.5– 2 °C, twice as fast as in the rest of the world. Kyrgyzstan is also

Country

Environmental issues and challenges

Kyrgyzstan

Melting glaciers, dependence on hydropower

76

Major projects and initiatives

Source of investment and financing

World Bank and UNDP climate change adaptation projects, investments in hydropower, solar and wind power plants

World Bank, UNDP, ADB

Kazakhstan

Technological and environmental challenges, dependence on hydrocarbons

Solar and wind energy projects

International organizations, public investments

Uzbekistan

Environmental sustainability of agriculture

“AgroDigital” to improve agricultural sustainability

UN, World Bank, international and private investors

WEJ | February-March 2025

PHOTO: UNDP

Investments and projects in green energy and sustainable development in Central Asia

WORLD ECONOMIC JOURNAL

experiencing a significant increase in summer temperatures.

This year, July was the hottest month in the country. In some areas, temperatures reached 45 °C. Such extreme temperatures have a negative impact on agriculture. For example, production of cotton, a key export crop, is declining due to droughts and a lack of stable irrigation conditions. The situation is similar for wheat and rice, which are critical for food security.

The World Bank predicts that by 2100, the temperature in Central Asia will increase by another 6 degrees Celsius. These figures may seem insignificant to some, but experts assure that these temperature changes will catalyze extreme weather events. So, a sharp change of weather from drought to heavy rains will become a frequent phenomenon in the region. This, in turn, will affect agriculture and water resources in Central Asia, something that 60% of the population is heavily dependent on. And experts assure that already by 2050, 5 million Central Asians will be forced to become climate migrants.

Yes, Central Asia is now focusing on green energy development to minimize the risks of climate hazards, but this process is also under threat. Glaciers in the Tien Shan are Kyrgyzstan's main source of water resources. They provide water for rivers, which in turn are an important resource for agriculture, hydropower, and the population. And now these glaciers are melting, rapidly losing their volume.

"From a worst-case scenario, by 2100, almost 90% of our glaciers will disappear. According to the moderate scenario, it is about 50-60%", says Andrey Podrezov, Head of the Department of Meteorology, Ecology and Environmental Protection at the Kyrgyz-Russian Slavic University.

By 2024, about 70% of the region's glaciers will have shrunk by 25–30%. And by 2050, a third of Central Asia's glaciers could disappear. Given the dependence of Kyrgyzstan and other countries in the region on water resources, there is a threat of fresh water shortages for agriculture and for future generations.

While the region is taking active steps to address this problem, geopolitical instability is also hitting its economy. There is a downside to the fact that Central Asia occupies a strategically important location between major economic centers and, as a result, is actively developing.

One of the threats is the unstable situation in neighboring Afghanistan. After the withdrawal of US troops in 2021, the situation in the country remains unpredictable. Central Asia is under pressure from the migration of refugees and not only. According to the UN, since 2021, more than 1.6 million Afghans have crossed the border into Central Asian states. The wave of migration has increased pressure on infrastructure and social systems, especially in Kyrgyzstan and Tajikistan, where resources are limited. In addition, it not only affects the security of the region but also poses challenges to its economic development and investment flows.

On the other hand, the ongoing sanctions against Russia hit not only its economy but also the economies of those countries whose main trading partner it is. Central Asian

countries are among them. In 2022, inflation jumped in CA countries amid sanctions against Russia: 19.8% in Kazakhstan, 16.7% in Kyrgyzstan, 13.8% in Uzbekistan, 11.2% in Turkmenistan, and 6% in Tajikistan. And while the countries of the region are still struggling with high inflation, they are taking steps to reduce the impact of economic shocks.

Central Asian countries have cleverly managed to diversify their ties with the outside world; with China's entry into the region, Russia's economic influence has weakened. But the question arises: won't China become just another agent of influence on the CA economy?

The global economic recession and falling oil and hydrocarbon prices are altering Central Asia, where the economy is largely dependent on natural resource extraction and exports.

The region is also dependent on foreign investment from China, Russia, and Western countries. For example, it is predicted that by the end of 2024, foreign direct investment in Kyrgyzstan's key industries could increase to 7-9%. This indicates an improving business climate in the region, but it is also fraught with risks in the form of consequences of sanctions against Russia or dependence on capital from China and debt problems, including those related to the implementation of the “One Belt, One Road” project.

Central Asia is uniquely positioned for sustainable growth despite the risks it faces. In a world gripped by localized military conflicts and political and economic tensions, Central Asia has managed to build a dialog on security and economic cooperation and to promote the formation of new regional alliances. One of these alliances is the Shanghai Cooperation Organization (SCO), where Central Asian countries are actively cooperating with Russia and China, launching new programs to develop the region's key industries and mitigate climate and geopolitical risks.

International cooperation in the energy sector is an important component of sustainable growth. Central Asian countries are jointly addressing environmental and energy issues. This requires time and effort to introduce green technologies, manage water resources, and develop new methods of processing natural resources. A focus on renewable energy sources will not only reduce the ecological footprint but also ensure energy security in the region.

Sustainable growth is impossible without the introduction of innovative technologies and digital solutions. Central Asia is already making significant steps in the digitalization of public services, education, and healthcare. In this case, the creation of innovation hubs and startups is an important element for stabilizing the region's economy by optimizing processes in agriculture, logistics, and other sectors.

To summarize, sustainable growth in Central Asia depends on the countries' ability to effectively use their resources and potential in the context of regional and international initiatives, as well as their willingness to adapt and implement new technological solutions.

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AFRICA: GROWTH PROSPECTS AMIDST INVESTMENT OPPORTUNITIES AFRICA’S RECENT ECONOMIC OUTLOOK Africa, a continent as large as China, Europe, India, and the United States, is characterized by immense geographic and demographic scale. The continent is also rich in natural capital, holding nearly 30% of the world's mineral reserves, 12% of oil reserves, and 8% of natural gas resources. Africa accounts for 40% of global gold reserves and possesses the most prominent cobalt, diamonds, uranium, and platinum reserves. Additionally, 30% of the world's rare earth elements, essential for semiconductors, batteries, and green energy technologies, are found in Africa, cementing its strategic role in the global value chain.

Many African nations have ratified international agreements like the Kyoto Protocol (1997) and the Paris Agreement (2016). Regional initiatives, including the African Union's Agenda 2063, the Blue Fund, the Desert to Power project, and

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WEJ | February-March 2025

the Great Green Wall, reflect a growing commitment to environmental sustainability across the continent.

In 2024, Africa's GDP growth was expected at 3.4%, rising to 3.8% in 2025, driven by easing inflationary pressures and global economic resilience. However, per capita growth remains modest, at 0.9% in 2024 and 1.3% in 2025, trailing behind the 2.4% annual growth achieved between 2000 and 2014.

AFRICA’S KEY INVESTMENT INDUSTRIES Agricultural Sector Addressing poverty in Africa remains one of the most pressing global development challenges, with agriculture playing a pivotal role in driving meaningful change.

According to the World Bank report, agriculture: • Employs 65-70% of Africa's workforce and serves as the primary economic activity for over 70% of the continent's rural poor.

• Contributes 30-40% to Africa's GDP. Despite its critical importance, food insecurity in sub-Saharan Africa has risen since 2015, driven by global disruptions, regional conflicts, and economic instability.

In addition to global shocks, Africa faces significant structural and productivity challenges: • Growth Rate: Agriculture grew by 4.1% (2000–2020) compared to: 2.7% worldwide 3.5% in East Asia and the Pacific 2.6% in Latin America 3.0% in South Asia • Fertilizer Usage: Africa consumes 22 kg/ ha of nutrients, compared to 278.6 kg/ha in East Asia and the Pacific.

• Irrigation: Less than 10% of Africa's agricultural land is irrigated, compared to over 40% in Asia.

• Productivity Gap: Agricultural productivity in Africa is up to one-third lower than in Asia and Latin America.

PHOTO: GEORGINA SMITH / CIAT / CC BY-NC-SA 2.0; SETH CARNILL / CTA ACP-EU / CC BY-SA 2.0

By Adneissa Christy Alezy

WORLD ECONOMIC JOURNAL

Africa’s electricity consumption is projected to grow sixfold by 2050 Final energy consumption per fuel type,1 million terajoules 36 30 20 10 0

~6x 2020

2030

2040

2050

Electricity in final consumption, % share 37 Bioenergy Other2 Oil Natural gas Hydrogen Coal Electricity3

32 26 21 17 10

12

2020 2030 2040 2050

In Africa in Archieved Commitments scenario.

Other includes heat, other renewables, solar, and synthetic fuels.

3 Includes all renewable-generated clectricity (including nuclear), as well as conventionally generated electricity (gas, oil, coal).

Source: Global Energy Perspective 2022, McKinsey Energy Insights 1 2

PHOTO: ALEJANDRO MOLINA / SHUTTERSTOCK; UN PHOTO

• Food Insecurity: Nearly 300 million people in Africa are projected to be at risk of famine by 2025 (AfDB).

Regardless of these challenges, Africa has immense potential to become a global leader in agricultural production: • Abundant Land: Africa accounts for 45% of the world's land suitable for sustainable agriculture, surpassing Latin America's 28%. Two-thirds of this land is concentrated in eight countries: Angola, the Democratic Republic of Congo, Madagascar, Mozambique, South Sudan, Sudan, Tanzania, and Zambia.

• Untapped Water Resources: Only 2-3% of Africa's renewable water resources are utilized, compared to the global average of 5%.

• Competitive Labor Costs: Africa's labor costs are among the lowest globally.

Minimum wages in Thailand are 2-3 times higher than in Ghana and 1.6-2.2 times higher than in Senegal.

Oil is essential for transportation and industry, particularly in economies like Nigeria, where it is a primary revenue source.

It also plays a key role in global trade, with countries like Nigeria and Angola significant exporters.

Natural gas is increasingly essential for both domestic use and export. Countries such as Algeria, Mozambique, and Egypt use natural gas for power generation and expand export capabilities. Seen as a cleaner alternative to coal, natural gas helps reduce emissions while supporting economic growth.

RENEWABLE ENERGY SECTOR

TRADITIONAL ENERGY RESOURCES: OIL AND GAS

Africa's energy needs are projected to double by 2050, driven by rapid population growth and industrialization.

Currently: • 600 million people lack access to electricity, a figure projected to reach 1.2 billion by 2050.

• 920 million people lack clean cooking facilities, with numbers expected to rise to 1.8 billion by the same period.

According to Statista, the continent holds around 12% of global oil reserves and 8% of natural gas resources, with major producers including Nigeria, Angola, Libya, and Algeria.

According to the Africa Energy Review 2024 by PwC, several African nations have made significant progress in renewable energy development:

“It is time to look beyond traditional meaning of nutrition in terms of quantity of what is consumed and instead look at nutrition as the quality of what we eat, trade, and general recognition of nutrition and health,” said Dr. Agnes Kalibata, AGRA President • Solar Energy: Egypt, Morocco, and Namibia lead large-scale projects such as the Benban Solar Park.

• Wind Energy: Kenya's Lake Turkana Wind Farm supplies over 75% of regional renewable electricity.

• Hydropower: Ethiopia, the Democratic Republic of Congo (DRC), and Uganda rely heavily on hydropower, with projects like the Grand Ethiopian Renaissance Dam playing a central role.

• Geothermal Energy: Kenya and Ethiopia are pioneering using Rift Valley geothermal resources.

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Renewable capacity in Africa, 2013-2023

Africa’s capital stock accumulation has been stagnant over the past three decades Average growth rates in the capital stock annual change, (%)

70 000 60 000

40 000 30 000 20 000

MW

10 000 0

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Bioenergy

Geothermal

Hydrogen

Solar energy

Wild energy

14.0 12.0 10.0 8.0 6.0 4.0 2.0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 -10.0 -12.0

50 000

Africa

0.0

China, rhs scale

(excl. pumped storage)

“Africa is entering a period of truly staggering change,” said Edward Paice, the director of the Africa Research Institute in London and the author of “Youthquake: Why African Demography Should Matter to the World.”

• Bioenergy and Ocean Energy: These remain untapped resources with substantial potential for sustainable energy production.

As of 2023, Africa's electricity generation capacity reached 256 GW. However, despite accounting for 20% of the global population, the continent represents just 4-5% of global electricity capacity. Renewable energy contributes 23% of Africa's total power capacity, with hydropower dominating due to its historical importance.

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WEJ | February-March 2025

Source: IMF investment and Capital Stock Dataset, 2021

Over the past decade, renewable energy growth has surged: • Solar photovoltaic (PV) energy grew by an average of 44% annually.

• Onshore wind energy achieved an average annual growth rate of 21%.

These gains have been primarily driven by large-scale solar and wind installations, which have doubled Africa's renewable power capacity in the last ten years.

INFRASTRUCTURE AND TRANSPORT Despite these sectors' critical role in driving economic growth and poverty reduction, Africa faces significant infrastructure deficits in sectors like energy, transportation, communication, sanitation, and housing.

Over the past three decades, capital stock growth has stagnated, with annual investment rates averaging 1–2% in the 1990s, rising modestly to 2–4% post2000. In comparison, China maintained a 10% yearly growth rate, resulting in its infrastructure capital stock reaching $64 billion by 2019, far surpassing Africa's $10.5 billion.

While ports have seen significant activity, railways, roads, and airports have struggled to attract even distribu-

tion, sufficient investment, and adequate maintenance. Roads, in particular, are vital for Africa's economic and social development, carrying: • 80% of the continent's goods traffic • 90% of passenger traffic Moreover, research by the Africa Finance Corporation (AFC) highlights: •D espite similar population sizes, Africa's paved road network spans 680,000 km, six times smaller than India's.

• S outh Africa and Algeria account for 40% of the continent's paved road network.

•A lthough Africa occupies 20% of the world's landmass, its paved roads comprise just 1.5% of the total global land area.

• Transport costs contribute up to 40% of the final price of goods in Africa.

Currently, Africa aims to improve connectivity between key economic and urban hubs. The Priority Action Plan (PAP) under the Programme for Infrastructure Development in Africa (PIDA) targets building 30,700 highways by 2040, with 16,066 km already completed since the early 2010s. A significant focus is finalizing the Trans-African Highway Network to boost regional connectivity.

PHOTO: AFRICA RESEARCH INSTITUTE

Note: MW = megawatt Source: IRENA, 2024a

WORLD ECONOMIC JOURNAL

African ports are attracting the largest private sector participation globally but the rest of the logistics and transport value-chain fails to generate private sector investment Investment in projects by sectors and by region, $m (2010-2022) Ports

Railways

East Asia & Pacific

5,056

Europe & Central Asia

5,470

Latin America & Caribbean

Roads 42,143

Africa

13,146

5,645 0

0,94 82,224

10,067

1,570

*

14,000

31,477

NO DATA 6,781

0

50,634 79,500

0 6,645

12,480

36,358 26,835

1,185

South Asia

96,138

4,387 12,159

Middle East

Airports

42,000

0

1,242 96,000

0

50,000

The Cairo Monorail Transit System in Egypt represents over 85% of the investment in railways Source: Private Cairo Monorail in Infrustructure PPI (Project Database, Worlbank) *

AFRICA'S RISING APPEAL FOR GLOBAL INVESTORS Africa’s Youth Africa's population is growing unprecedentedly, shaping the youngest and fastest-expanding demographic globally. According to United Nations forecasts, by 2050, they are projected to represent a quarter of humanity and at least one-third of all people aged 15 to 24. Currently, the median age on the continent remains strikingly young, at just 19.

Young Africans are now better educated and more digitally connected than ever before. In 2020, 44% of young Africans graduated from high school, up from 27% in 2000. Additionally, approximately 570 million Africans use the internet, reflecting the continent's growing digital presence.

Despite progress in education, employment remains a significant challenge. According to the World Bank, up to 1 million Africans enter the labor market every month, yet fewer than 1 in 4 secure formal jobs.

Faced with limited opportunities, migration has become a standard escape route. Since 2010, over 1 million sub-Saharan Africans have migrated to Europe, according to the Pew Research Center.

Business Programs Let’s take a look at the different international investment projects in the region.

Boost Africa A joint initiative by the African Development Bank (AfDB) and the European Investment Bank (EIB), aims to drive Africa's economic growth by empowering young entrepreneurs and fostering innovation.

The program focuses on: • E nhancing entrepreneurship and innovation across Africa; •C reating quality jobs for young Africans; •B ridging the financing gap at the early and risky stages of enterprise creation.

The program targets sectors with high potential for social and economic impact: • ICT • Agribusiness • Financial services and inclusion • Healthcare • Education • Renewable energy The initiative aims to leverage €1 billion in investments to support 1,500 SMEs and create 25,000 direct and at least 70,000 indirect jobs, with an estimated overall target size of around €250 million across its various components.

The Regional Network A project supported by the European Union (EU) will serve as a platform to strengthen business incubation in Angola, Somalia, Ethiopia, and Madagascar. Its key objectives are to: • S upport entrepreneurship and grow micro-, small-, and medium enterprises (MSMEs); • Create jobs for youth and women; • E nsure inclusive access to markets and value chains; •P romote knowledge sharing and collaboration among incubators.

Moringa Partners Moringa Partners is an investment firm focused on sustainable agroforestry projects in Latin America and Sub-Saharan Africa.

The firm targets profitable, large-scale agroforestry projects with high environmental and social impact. Moringa Partners has invested in various projects, including a wind farm in Kenya and solar power installations in South Africa, contributing to both energy access and economic growth.

RISKS AND CHALLENGES Political Instability in Africa Political instability remains a persistent challenge across Africa, driven by a mix of democratic dissatisfaction, economic struggles,

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More than a third of the world’s young people will live in Africa by 2050 Share of global population aged 15 to 24 2023 29% 24% 23%

2050

35%

Africa Southern Asia 26%

Eastern and Southeastern Asia 17% 8.6% 6.3% 4%

Latin America & Caribbean 6.9% Europe 5.1% Western Asia 4.4% Northern America 3.5%

Regions are based on U.N. Classifications. Regions will less than 1 percent of the global population are not shown Source: U.N. World Population Prospect 2022

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WEJ | February-March 2025

• Ethiopia: Prime Minister Abiy Ahmed's push for an Ethiopian seaport has reignited regional tensions, especially with Somalia after an agreement with Somaliland raised concerns over sovereignty and territorial disputes.

Corruption Issues Corruption remains a significant barrier to social development and equitable access to essential services in many African countries, particularly education and healthcare.

Transparency International's 2019 Global Corruption Barometer shows that corruption levels vary widely across sectors and countries, highlighting systemic challenges undermining progress.

Corruption in Education • In some regions, access to schooling is contingent upon school fees, which are meant to cover operational costs, while additional financial barriers, such as payments for school materials, persist.

• Data from Global Findex indicates that 54% of adults in Sub-Saharan Africa are apprehensive about affording their children's education.

• Among the five ISDA target countries, DRC recorded much higher bribery rates in education, while Madagascar also reported elevated levels.

Corruption in Healthcare • The World Health Organization's UHC Service Coverage Index highlights disparities in access to essential health services, including maternal care, infectious disease treatment, and non-communicable disease management.

• DRC and Madagascar scored below the African regional average for healthcare service coverage, while the other three ISDA countries performed above but still below the global average.

• The private sector is critical in filling healthcare gaps. In some regions, private providers deliver up to 35% of healthcare services.

PROSPECTS FOR 2025 Africa remains a region of immense economic potential, expected to host three-quarters of the world's top 20 fastest-growing economies in 2025. Most African nations are expected to experience faster economic growth compared to 2024, underscoring the continent's dynamism and resilience. These include Niger, Senegal, Libya, Rwanda, Côte d'Ivoire, Djibouti, Ethiopia, The Gambia, and Benin.

• Niger: Despite facing economic sanctions following a coup d'état in July 2023 and its subsequent exit from ECOWAS, Niger is projected to be Africa's fastest-grow-

PHOTO: GOALLORD-CREATIVITY / SHUTTERSTOCK

and military interventions. A wave of recent coups has weakened public confidence in democratic governance.

Since around 2015, a series of crises with primarily external origins—including plunging commodity markets, rising insecurity and extremism, the COVID-19 pandemic, authoritarian populism, and shifting geopolitical alliances—have exposed the fragility of democratic institutions and weak state capacities across much of the continent.

• South Africa: The ruling African National Congress (ANC) lost its parliamentary majority for the first time since 1994, driven by corruption scandals, economic challenges, and power cuts.

• Senegal and Ghana: Both nations are preparing for leadership transitions, with economic concerns and dissatisfaction driving key electoral issues. Border tensions with coup-affected neighbors Mali and Burkina Faso added to regional instability.

• Rwanda: President Paul Kagame secured a fourth term amidst ongoing criticism of his regime's human rights abuses and suppression of dissent in 2024.

• Sudan: The civil war between the Sudanese Armed Forces and the Rapid Support Forces has displaced over 7 million people and killed around 10,000 despite limited international attention.

WORLD ECONOMIC JOURNAL

Figure 1. Political stability and economic development in Sub-Saharan Africa (2021)

-2.50

-2.00

-1.50

-1.00

-0.50

Political Stability

-0.00

0.50

1.00

3.0 2.8

Note: The x-axis represents the World Governance Indicator and political stability. Oil rich economies are represented in blue; non-oil but resouce-rich economies in violet, non-resource rich countries in navy.

The data is the latest avaliable (2021) Source: WGI database for political stability indicator and WGI database for GDP per capita

PHOTO: MARK GARTEN / UN PHOTO

“Given the evolving security landscape in Africa, and instances where United Nations peacekeeping missions may not be suitable, it is critical to recognize how African Union-led peace support operations, including enforcement actions, contribute to both regional and global peace and security efforts.”, said Fatima Kyari Mohammed, Permanent Observer of the African Union to the United Nations ing economy and the third-fastest globally.

This growth is driven mainly by the oil industry, which, thanks to a 2,000-kilometer pipeline to Benin, is expected to contribute a quarter of the country's GDP. • Senegal: Following a period of political unrest—now resolved—Senegal is predicted to be Africa's second-fastest-growing economy. Its expanding hydrocarbons

DRC

Ghana

Madagascar Zimbabwe

28%

3.2

15% 16%

3.4

25%

3.6

4% 12%

3.8

27% 12% 21%

-3.00

4.0

33%

Eswatini Cote d’Ivoire Angola Ghana Nigeria Kenya Mauritania Cabo Verde Cameroon Sudan Congo, Rep. Senegal Zambia Sao Tome and Principe Guinea Benin Comoros Uganda Mali Ethiopia Burkina Faso Togo Tanzania Lesotho Rwanda Zimbabwe Gambia, The Malawi Chad Niger Eritrea Guinea-Bissau Sierra Leone Somalia South Sudan Madagascar Liberia Mozambique Congo, Dem. Rep. Central African Republic Burundi

4.2

12% 15%

Botswana

43%

Namibia

4.4

80%

Mauritius

Bribery rate in public clinics and health centers

Bribery rate in public schools

59%

South Africa Equatorial Guinea Gabon

Overall bribery rate

4.6

log GDP pc PPP

Seychelles

Figure 1. Global Corruption Barometer 2019

Average of 35 African countries surveyed

Source: transparencycdn.org

sector underpinned this growth, with over 40 trillion cubic feet of natural gas discovered between 2014 and 2017.

• Democratic Republic of Congo (DRC): Growth is primarily driven by the extractive sector, which is supported by the opening of new oilfields. Other contributors include agriculture, services, and mining.

• Rwanda: Economic expansion is fueled by private consumption and investment, an improving business environment, and ongoing development projects.

• Ivory Coast: Increased infrastructure investment, market-friendly reforms, and improvements in the National Development Plan support growth.

Overall, Sub-Saharan Africa's projected growth rate of 4.2% in 2025 surpasses the global average of 3.2%, positioning it as the second-fastest-growing region globally after Emerging and Developing Asia (5.2%).

KEY RECOMMENDATIONS FOR AFRICA'S DEVELOPMENT 1. Strengthen governance and political stability: • Prioritize transparent and accountable governance to build trust and attract investment.

• Address macroeconomic imbalances, including inflation and rising debt levels, to stabilize economies.

2. Invest in infrastructure and digital innovation: • Accelerate critical infrastructure projects in transportation, energy, and digital connectivity.

• Promote AI policy frameworks and digital skills training to build a tech-savvy workforce.

3. Focus on critical minerals and industrial diversification: • Shift from raw material exports to domestic processing and refining of critical minerals.

• Establish strategic global partnerships to maximize economic benefits from the clean energy supply chain.

Africa's young population, abundant natural resources, and renewable energy potential position it as a future leader in global economic growth and sustainability. Strategic investments, governance reforms, and sustainable development initiatives are needed to ensure inclusive, resilient, and transformative growth for both the continent and the world.

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BANGLADESH:

ON THE PATH TO AN ECONOMIC BREAKTHROUGH

B

angladesh’s economy has experienced strong, steady growth in recent years, which is confirmed by a significant increase in the gross domestic product (GDP) and by the improvement of key socio-economic indicators.

ECONOMIC GROWTH OF BANGLADESH IN RECENT YEARS Bangladesh's economy showed impressive growth in 2023. The country's gross domestic product reached $437.42 billion, accounting for 0.41% of the global economy.

Bangladesh's real GDP increased by 5.78%, outpacing the world average growth rate, which was only 3.34%.

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THE COUNTRY'S ROLE IN SOUTH ASIA AND THE GLOBAL ECONOMY Bangladesh occupies an important position in South Asia. It is the second-largest economy in the region after India. In terms of GDP per capita, the country is ahead of India and Pakistan.

The main drivers of economic growth are the textile industry, information technology, and agriculture. The textile industry, in particular, makes Bangladesh the second-largest garment exporter in the world after China.

Thus, Bangladesh continues to strengthen its position as a key player in the South Asian economy and the global economy as a whole.

PHOTO: VECTACLAUSE / ADOBE STOCK

By Anastasia Moore

WORLD ECONOMIC JOURNAL

KEY DRIVERS OF ECONOMIC DEVELOPMENT IN BANGLADESH Bangladesh's economy is characterized by dynamic development in several key sectors: textiles, information technology, and agriculture.

Textile industry: leadership in exports The main driver of the Bangladesh economy is the textile industry. The country's textile manufacturing market is estimated at $19.04 billion in 2024, with a projected CAGR of 5.81% to reach $25.25 billion by 2029. Bangladesh is the world's second-largest apparel exporter after China, with more than 80% of export earnings coming from ready-made knitted garments and hosiery.

PHOTO: ADB; MONIRUZZAMAN SAZAL / UNESCO-UNEVOC / CC BYNC-SA 3.0 IGO

Growth of the IT sector and digitalization of the economy The information technology sector in Bangladesh is showing steady growth. The country's ICT (Information and communications technology) market is expected to grow by an average of 1.83% over the next five years. The introduction of digital technologies and the development of cybersecurity and artificial intelligence contribute to the modernization of the economy and increase its competitiveness.

Foreign Investor Support Programs The main body responsible for attracting and supporting foreign investment is the Bangladesh Investment and Development Authority (BIDA). BIDA provides a wide range of services, including: • Providing information and advice to help investors obtain the data they need; • Facilitating project registration and approval to streamline the process for foreign, joint, and local projects; • Approving work permits for foreign specialists to simplify the employment process for international workers; • Assisting with utility connections to arrange access to necessary infrastructure networks.

BIDA has also developed an online One Stop Service (OSS) platform that integrates more than 150 services from 40 different government agencies, providing investors convenient access to the services they need.

“Over the past decade and a half, I have witnessed Bangladesh’s numerous transformations through sustainable and inclusive economic growth with active private sector participation.”

Masatsugu Asakawa, President of ADB

Development of agriculture and agricultural technologies Agriculture remains an essential sector of the Bangladesh economy, employing many of the population. In recent years, some agricultural technologies have been introduced to increase productivity and resilience to climate change. However, the sector faced challenges in 2024, including floods and protests, which shut down almost a third of large garment factories.

Thus, despite the emerging challenges, textiles, information technology, and agriculture continue to be the key drivers of economic growth in Bangladesh.

INVESTMENT CLIMATE IN BANGLADESH Bangladesh is actively working to create a favorable investment climate to attract foreign investors.

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“Bangladesh has repeatedly demonstrated exceptional resilience and determination in the face of adversity. I am sure that with urgent and bold reforms aimed at improving the economic and financial management altogether with the business environment, Bangladesh will be able to return to the path of strong and inclusive growth with millions of job opportunities for its youth.”

Abdoulaye Seck, World Bank Director for Bangladesh and Bhutan

Government regulation of the Bangladesh economy aims to create favorable conditions for businesses and foreign investors. Key features include: 1. P roviding tax holidays and reduced rates for specific sectors of the economy as part of tax incentives; 2. I ncentives for exporters consist of support and subsidy programs for export-oriented enterprises; 3. The creation of special economic zones includes the establishment of SEZs with special conditions to attract investment and provide new job opportunities.

The Bangladeshi government is actively working to improve infrastructure, including transport and energy networks, which will help create a more favorable investment climate. Thus, Bangladesh offers foreign investors a variety of support programs and creates conditions for successful business.

RISKS AND CHALLENGES FOR THE BANGLADESH ECONOMY Bangladesh's economy faces many risks and challenges, including infrastructure and urbanization issues as well as threats related to climate change.

Problems of infrastructure and urbanization • Infrastructure problems: The country is experiencing an electricity shortage, especially in rural areas, which limits the opportunities for industrial growth and the quality of the population's daily life. In 2023, Bangladesh was reported to have had 114 days of electricity outages during the first five months of the year, which compares to 113 days for all of the 2022 year. The main reason for the electricity disruptions is the shortage of fuels, including gas, coal, and fuel oil, due to currency problems in the country.

The road network has significant problems, including congestion and insufficient road capacity, which hamper logistics and the movement of goods and people. In 2023, roads in Bangladesh were reported to be congested, causing significant delays and increased levels of air pollution.

• Urbanization problems: Rapid urbanization is overburdening urban infrastructure, deteriorating quality of life, and increasing exposure to natural disasters. Lack of proper planning and investment in urban infrastructure exacerbates these problems. In 2024, the capital, Dhaka, was reportedly experiencing water supply and sanitation problems due to rapid population growth.

To address these challenges, investments in modernizing infrastructure, improving urban planning, and increasing resilience to natural disasters are necessary.

Threats of climate change to the economy Bangladesh is among the countries most exposed to the effects of climate change.

Rising sea levels and increased frequen-

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PHOTO: WORLD BANK; K M ASAD / IMF PHOTO / CC BY-NC-ND 2.0

FEATURES OF GOVERNMENT REGULATION

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cy of floods and cyclones significantly impact agriculture, fisheries, and water resources, leading to economic losses and threats to food security. According to the World Bank, climate change could lead to additional economic losses, up to 2% of the country's annual GDP growth.

Bangladesh needs to invest in modernizing infrastructure, effective urbanization management, and the development of climate change adaptation strategies to achieve sustainable economic growth.

PHOTO: SK HASAN ALI / SHUTTERSTOCK; WORLD BANK

OUTLOOK FOR 2025 WITH OPPORTUNITIES FOR GLOBAL PLAYERS AND RECOMMENDATIONS FOR INTERNATIONAL COMPANIES Bangladesh continues demonstrating strong economic growth, opening up new opportunities for international investors.

Opportunities for global players • Development of special economic zones (SEZs) The Government of Bangladesh is actively developing SEZs such as the National Special Economic Zone, formerly Bangabandhu Sheikh Mujib Shilpa Nagar. This zone, located in the Chittagong district, covers 33,407 acres and is designed to attract investment in various sectors,

Textiles, information technology, and agriculture continue to be the key drivers of economic growth in Bangladesh including textiles, shipbuilding, and pharmaceuticals. By February 2024, five industrial units had begun commercial production, with another 22 under construction. The total investment in the project is $1.13 billion, with an expected creation of 775,228 job opportunities.

• Information technology sector Bangladesh aims to become a regional center for outsourcing and software development. Initiatives to create technology parks and provide tax incentives for IT companies create attractive conditions for international technology players.

“Bangladesh is a story of the successful development in South Asia, and the World Bank is proud to be a partner in the country's development over the past 50 years. We remain committed to helping Bangladesh achieve its growth aspirations.

This will require timely policy action to build strong public institutions, improve competitiveness, build climate resilience, and strengthen external and fiscal buffers.

Martin Reiser, World Bank Vice President for South Asia

RECOMMENDATIONS FOR INTERNATIONAL COMPANIES • I t is recommended that the state of infrastructure, especially in the new economic zones, be carefully assessed to minimize risks associated with logistics and supply.

• I t is important to familiarize yourself with local laws and regulations, especially regarding tax incentives and business registration procedures, to effectively take advantage of available incentives.

•G iven Bangladesh's exposure to natural disasters such as floods and cyclones, companies should develop risk management strategies and ensure the sustainability of their operations.

In conclusion, Bangladesh offers significant opportunities for international investors, especially in the areas of manufacturing, information technology, and agriculture. However, to run a successful business, one must take into account local features, infrastructure issues, and environmental risks.

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THE PATH FORWARD: CHINA'S ECONOMIC EVOLUTION China, one of the leading economic and geopolitical superpowers in the world, can boast one of the highest GDP growth rates across the globe.

By Anna Sokolidou

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T

rue, China’s economic growth has recently slowed down slightly due to a number of reasons but is still over and above the rates observed in developed countries. Apart from its economic influence, China is one of the most influential BRICS+ members. BRICS+, Brazil, Russia, India, China South Africa, as well as Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates, are current member states. These countries do not only form an economic alliance but also a political one to act as a counterforce to the West order and international organizations, such as the IMF.

activity. Yet, recent policy measures taken by the Chinese government could raise confidence and consumption higher than many economists expect. One of the key problems of the Chinese economy is the property sector. Credit events could further disrupt its activity, thus affecting growth. Only increased government support could revive investment in the sector.

China is the world's both largest seller and buyer of goods in 2024 and a major trading partner for more than 150 economies

MAIN ECONOMIC TRENDS As reported by Reuters, economic growth in China has totaled 5.0% in 2024, a decrease compared to last year. Also, according to OECD, the growth rate will gradually weaken in 2025 and 2026. According to the experts, housing starts will keep falling.

However, infrastructure and manufacturing investment are rising at a steady pace with public investment increasing thanks to more local government debt issuance.

Consumption growth will stay slow, depressed by higher savings. Consumer price inflation will, therefore, remain very low. Export growth will, however, remain quite strong. But tightening of global trade restrictions likely done by Donald Trump could contract Chinese industrial

In July last year there was a meeting organized by the Chinese Communist Party where the main economic priorities and trends were discussed. These included: • Technological innovations, to reduce Chinese dependence on foreign supplies; • Using modern technologies to innovate traditional industries, especially in the manufacturing sector;

LIQUIDITY RATIOS BY REGION (2024) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0

1960

1970

1980

Source: World Bank

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1990

2000

2010

2020

• E xporting Chinese standards to international customers when they buy Chinese systems or technologies, to increase Chinese influence and create harmonization or plug-and-play challenges for international competitors; • Allowing foreign companies to access China’s domestic market only if these companies share new technologies and knowledge.

In order to prevent the economy’s growth slowdown, the Chinese central bank is easing monetary policies. There has therefore been a series of cuts of the reserve requirement ratio, the policy and prime interest rates, as well as interest rates on existing mortgages. Housing support measures have been extended.

For example, prudential regulations for second houses have been eased.

Government fiscal policies are highly supportive of infrastructure projects and now also incomes. Increasing the local government special debt quota and debt swaps will raise funds available for projects. Matching of skills and education to those needed by the market would address skills shortages and also reduce youth unemployment, which has been quite high.

NEW INITIATIVES China is experiencing high growth of emerging technologies, including 5G, advanced AI, IoT (Internet of Things), and blockchain-based technologies.

China is accountable for almost half of the world’s e-commerce transactions, while advancements by companies like Huawei, Baidu, JD and Tencent are helping the Chinese economy grow at a much higher rate than most developed countries. For example, according to World Bank, the EU’s average GDP growth rate in 2023 totaled only 0.4%.

China’s progress is also very strong in the field of blockchain technologies. As part of its data governance strategy, China has recently published its national blockchain infrastructure plans. These plans are expected to be fully implemented in China by 2029. This project could become one of the world’s largest blockchain-powered

WORLD ECONOMIC JOURNAL

data networks and is expected to attract approximately 400 billion yuan or $54.5 billion in annual investments over the next five years.

Blockchain technologies are expected to affect many sectors of the Chinese economy, including supply chain tracking and quality control in industrial manufacturing.

Blockchain technologies improve transaction transparency and facilitate automated compliance processes. Obviously, these benefit the financial services sector.

Healthcare providers would also gain access to patients’ data-sharing capabilities.

Blockchain technologies are also highly effective in transportation, environmental protection as well as cross-border trade operations.

Also, green energy is an important part of China’s economic agenda. China has “dual carbon” goals—to reach its carbon emissions peak before 2030 and also become carbon neutral before 2060.

Green energy is getting a larger proportion of the country’s energy consumption.

In 2013, coal was accountable for 67% of Chinese energy consumption. That number decreased to 55.3% in 2023. Over the same period, the significance of oil, hydro and nuclear power have remained almost unchanged. The greening of the energy mix has been influenced mostly by the higher use of wind and solar power as well as natural gas.

CHINA MAJOR EXPORT DESTINATIONS

US 14.8%

Hong Kong 8.2%

Japan 4.7% South Korea 4.4% Other 51% Netherlands 3.0%

Vietnam 4.1% India 3.5% Russia 3.3% Germany 3.0%

Source: Britannica

CHINA MAJOR IMPORT SOURCES

Taiwan 7.8% US 6.5% South Korea 6.3%

CHINA’S TRADE In the recent several decades China has been considered to be the world’s strongest export economy. Since 2000, Chinese exports have been rising at a very fast pace.

According to data released by the General Administration of Customs (GAC), China's imports and exports increased by 5% year-on-year in 2024 to reach 43.85 trillion yuan ($5.98 trillion), while the total foreign trade volume set a new record high.

As the customs show, in 2024, China's total exports, meanwhile, rose by 7.1% year-on-year to reach 25.45 trillion yuan.

Imports, in turn, increased by 2.3% to hit 18.39 trillion yuan.

Japan 6.3% Australia 6.1% Russia 5.0% Other 49% Vietnam 4.0%

Brazil 4.8% Germany 4.2%

Source: Britannica

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So, China is the world's both largest seller and buyer of goods in 2024. China has become a major trading partner for more than 150 economies. Meanwhile, its circle of foreign trade partners is expanding.

China’s trade volumes under the BRICS cooperation increased by 5.5% with member and partner countries. Moreover, China and the EU maintained close economic and trade ties—bilateral trade increased by 1.6% in 2024.

Even US-China trade increased by 4.9%, closely matching China's overall trade growth.

CHINESE POSITION IN THE WORLD’S SUPPLY CHAINS As I have mentioned above, China is the world’s leading exporting economy.

Most of the country’s exports consist of manufactured products, such as electrical and electronic machinery, equipment, clothing and footwear. China also sells agricultural products, chemicals, and fuels. Its major export destinations are the US, Hong Kong, Japan, EU countries, and South Korea.

China mostly imports machinery and apparatus (including semiconductors, computers, and office machines), chemicals, as well as fuels. The main

countries China imports products from are Taiwan, South Korea, Japan, the US, Australia, and the EU. Regionally, almost half of China’s imports are due to East and Southeast Asia, and some a quarter of its exports go to the same trading partners.

standings between the US and China has been Taiwan. Moreover, the US administration has criticized China for its human rights violations. One of these has been the rights of Uighur-based Muslims.

GEOPOLITICAL CHALLENGES

Obviously, sanctions and trade measures against China only raise tensions between the US and China and add more uncertainty around the world. To start with, it decreases international investors’ confidence. This is especially true of stockholders investing in Chinese companies and corporations actively co-operating with China. That is because both Chinese companies exporting products to the US and US producers selling goods to China or having their production facilities in this country can face very serious losses.

Obviously, people employed by these companies can be made redundant, thus raising unemployment numbers both in the US and China. Moreover, tariffs (taxes that governments place on imported goods), quotas (import limits that prevent more than a set amount of a specific good from being imported into a country) and embargos (bans on the trade of a particular good, category of good, or with a specific country) increase prices of the goods affected. But due to rising prices of the goods affected the overall inflation levels in the US and China can rise, thus forcing the two countries central banks raise the interest rates. Tightening monetary conditions raises recession chances. So, if the trade war between the two countries goes too far, we are likely to see an economic crisis soon enough.

One of the key geopolitical challenges for China, in my view, is centered on its relations with the US. Both economic and political relations between the US and China have been quite tense for several reasons. First of all, the US sees the rise of China as a direct threat to its global dominance. It is for exactly the same reason that the collective West is rather opposed to the BRICS’ expansion. In other words, China is seen as a strong rival to the US. One of the ways the US wants to control China is by imposing trade restrictions.

The trade balance between the US and China is not in favor of the US, indeed. So, the newly elected president Donald Trump is highly likely to continue its trade policies the way it did during his 2016-2020 term.

This means that Mr. Trump will raise tariffs of Chinese products.

But the sources of conflict do not only limit to trade. One of the recent misunder-

SANCTIONS

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PHOTO: ALEX TAO WANG / SHUTTERSTOCK

CHINA’S RESPONSE In response to the US actions China also imposed tariffs on America’s products.

Moreover, the Chinese government also introduced its own Anti-Foreign Sanctions Law in 2021. It also approved regulations very similar to those issued in the US—an export or trade law and an entity list—providing the Chinese government with an opportunity to punish foreign companies for activities seen as being against Beijing’s interests. However, Beijing’s reactions to

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the sanctions against Huawei as well as the recent technological and financial restrictions have been quite moderate mostly because tougher countersanctions would have been self-defeating. For example, imposing sanctions against US companies like Apple or General Motors that have major production facilities in China would mean massive job losses for Chinese workers. Also, depriving US from access to Chinese rare earth minerals essential for green technologies would lead to the US finding alternative supplies elsewhere.

As concerns Washington’s allegations of unfair trade practices, Beijing’s general reaction to was to ask for continued dialogue and to highlight that progress had been made on many issues.

PHOTO: ESB PROFESSIONAL / SHUTTERSTOCK

KEY ECONOMIC SECTORS Despite the fact that China is famous for its manufacturing sector, Chinese services accounted for 54.6% of the country’s GDP in 2023. In other words, this is the country’s largest sector of economic activity. The services sector includes expert services, healthcare, and entertainment.

The manufacturing sector is accountable for over 38% of the country’s GDP. So, it is in the second place among the Chinese economy’s largest sectors. Most of the economic decline has been due to the industrial sector over the last couple of years. However, the manufacturing sector is still very important for the domestic economy. Nowadays, Chinese companies are getting more capital-intensive. They are also prioritizing the domestic market, while the government offers tax incentives and other support measures.

China’s agricultural sector contributes 7% to GDP and is the country’s third largest sector. China has always produced, exported, and imported agricultural goods.

The agricultural market’s gross output value is expected to reach $1,682 billion by 2028, constituting yearly growth of 5.95% between 2024 and 2028.

At the same time, China also imports agricultural products. The agricultural market is expected to import goods worth $218.1 billion in 2024. Between 2024 and

Chinese services accounted for 54.6% of the country’s GDP in 2023— this is the largest sector of economic activity 2028 the agricultural import growth rate is expected to total 17.73%.

China has also made substantial investments in technology such as AI, the Internet of Things, and robotics. Such technological advancements have affected the services sector via fintech and e-commerce, the manufacturing sector via automation and also the agricultural sector via relevant technologies.

The Chinese government’s 14th FiveYear Plan for Digital Economy Development prioritizes blockchain technologies, 6G internet, sensors, and semiconductors.

GROWTH FORECASTS According to Statista, the manufacturing sector in China is expected to grow by 2.00% between 2025 and 2029, thus resulting in a market volume of $5.2 trillion in 2029. Meanwhile, an annual growth rate of the agricultural sector is expected to be 3.44% between 2025 and 2029. According to the IMF, the services sector is expected to show the strongest performance in Chi-

na. The projected growth rate will remain constant at about 5% in 2024, despite the property sector’s relatively poor performance.

POSSIBLE SCENARIOS China, the leading BRICS+ economy, has been suffering from GDP growth slowdown. However, its contribution to the global economy is still very significant.

China’s government as well as the People’s Bank of China have reasons to further stimulate the economy because of the country’ GDP growth slowdown and low inflation readings. Further monetary and fiscal incentives will make the economy grow faster. Low economic growth is not as dangerous as the overheated economy because after an economic boom there is traditionally a bust or an economic crisis.

This is clearly not the case with China right now. So, it seems likely the Chinese economy is here to gain. However, one of the largest problems facing China is deteriorating relations with the US, including the US-China trade war and also tensions against Taiwan. Additionally, there could be a global financial crisis, which will likely affect China due to its reliance on exports to other countries.

RECOMMENDATIONS China is still an attractive destination to invest money in. However, it is necessary to first analyze which Chinese assets will be most affected by a highly likely trade war ahead as well as the global financial crisis. Obviously, it is the best to choose high-quality assets, for example, stable and large Chinese corporations, and also to avoid investing too much capital in one country.

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TURKISH ECONOMY IN 2025

PHOTO: WIRESTOCK CREATORS / SHUTTERSTOCK

By Anna Sokolova

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ECONOMIC TRENDS Türkiye’s economy has slowed in 2024.

Its year-on-year GDP growth has lingered between 2% and 3% in the second half of 2024. This is very slow growth, given the country’s inflation rate of 44.38% as of December 2024. Still, this was a decrease from about 80% inflation readings recorded a couple of years ago.

Tight financial conditions imposed by the central bank of Türkiye made the country’s inflation slow down almost twofold, while weighing on domestic demand. So, household spending and investment levels have decreased sub-

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Türkiye is an industrializing economy with a large agricultural base stantially. Additionally, other economic indicators, including manufacturing capacity utilization, the PMI (purchasing managers’ index), services production, and commercial loans in real terms have all dropped. All this suggests that economic activity could slow down even further. The unemployment rate is holding up just below 10%, which suggests stagflation (inflation and unemployment) of the Turkish economy.

According to OECD (Organisation for Economic Co-operation and Development), monetary and fiscal policies will remain tight. Türkiye’s central bank and the government have decided to keep policies tight as part of the effort to put Türkiye’s economy back on track. Only recently has the country’s central bank lowered the base interest rate from 50% to 45%. Price stability is still one of the main central bank’s priorities, while the country’s economic growth is slow. The high inflation readings are partly due to the country’s budget deficits and poor current account balances. This means that the government spends more than it earns, while the country imports more than it exports. Moreover, in 2024 the legal minimum wage has been raised by the government twofold.

But let me talk to you about Türkiye’s strongest economic sectors.

The first and most important one is the agricultural sector. It is crucial for

PHOTO: MORROWIND / SHUTTERSTOCK

INTRODUCTION Republic of Türkiye has always acted as a liaison between East and West thanks to its geographic location. It is widely considered to be an upper middle-income, diversified Middle Eastern economy.

However, its health has been shattered by high inflation and currency depreciation, caused by expansionary monetary and fiscal measures taken just before the 2023 elections. Right now, they are not in place, however, because of the galloping inflation. Generally, we can say that Türkiye is an industrializing economy with a large agricultural base.

The country also has certain geopolitical influence. Türkiye is a member of the UN since 1945 and NATO since 1952.

Since 2005 there have been EU accession talks. Türkiye’s political system has been presidential since 2017. Türkiye’s population is close to 88 million people.

According to the IMF’s data as of 2024 it was considered to be the 17th largest economy in the world and the 7th largest in Europe. Among its economic and political advantages are its geographic location between Europe and Asia. The country has access to the Black Sea and the Mediterranean Sea as well as a favorable climate, which is very useful for the country’s agricultural sector.

However, in the recent years the country’s economy has been struggling due to galloping inflation, very high unemployment figures, especially among young people.

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INFLATION IS DESCREASING, BUT REMAINS HIGH % 100 Headline inflation Policy rate

80 60 40 20 0

2021

2022

2023

2024

Source: OECD

Türkiye’s economy, making the country one of the world’s top ten agricultural producers. Türkiye’s agricultural sector mostly produces wheat, sugar beet, milk, poultry, cotton, vegetables, and fruit.

Also, the country is the global leader in production of hazelnuts, apricots, and oregano.

About 50% of the country’s land is used in agriculture. The sector employs roughly 15% of the workforce and contributes about 10% of the country’s exports and over 5% of the national GDP. In 2024, over 380 billion lira has been used as government’s subsidies to finance agriculture. Türkiye is the fourth-largest supplier of vegetables and the seventh-largest supplier of fruit of the EU. Despite Türkiye being a major food producer, it relies on foreign supplies of wheat. Much of it comes from Russia and Ukraine.

Now, just a couple of words about the country’s industrial sector. Türkiye is quite strong in producing consumer electronics and home appliances. In fact, the country’s Vestel ranks as the largest television producer in Europe. It was accountable for about a quarter of all TVs sold across the continent in 2006. Also, Beko Türkiye and Profilo Telra are famous TV brands in Europe.

Equally important for Türkiye’s economy is its textile and clothing industry.

The industry is the world’s fifth-largest exporter, which contributes almost 10% of Türkiye’s GDP and employed 750,000 people as of 2018. A substantial part of the country’s textile production is exported to the EU. The automotive sector is also one of the pillars of Türkiye’s manufacturing industry, producing 1,352,648 motor vehicles as of 2022, thus making it the 13th largest vehicle producer all over the world. Turkish automotive brands, including TEMSA, Otokar, and BMC all produce vans, buses, and trucks.

According to analysts, Türkiye’s Automobile Joint Venture Group is Türkiye’s leading EV company with great potential.

WHY IS TÜRKIYE AN ATTRACTIVE INVESTMENT? Türkiye plays a major role in the geopolitics of the Black Sea area, connecting Europe, the Middle East, and Central Asia. It is also a NATO member. It, therefore, has close ties with the Middle East, the US, Europe, Russia and Ukraine, often acting as a mediator in peace talks.

According to the investment office of the presidency of the Republic of

Türkiye, Türkiye is an attractive country to invest in because of the access to its large domestic market and also regional markets. There are also many multinational companies located in this country. Also, Türkiye has large population growth with half of its population under 33.5 years old.

This means that there is enough young labor force, which is also quite educated and has high productivity. The country also has a liberal investment climate, has no barriers for FDI and offers strong protection for investors. Also, as I have mentioned before, some of the country’s economic sectors are strong.

KEY CHALLENGES Türkiye’s very high inflation is the most important threat for the economy.

However, reasonably high unemployment and not so high GDP growth do not allow the central bank to tighten the monetary policies further. Türkiye’s assets are likely to depreciate, if there is a global economic crisis because its assets are considered to be high-risk and always drop in value when there is market volatility. Türkiye’s key industries suggest there is potential for the country’s economy, given its technical expertise, its strong agricultural base and also its textile industry .

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FEBRUARY - APRIL 2025

14-16

FEBRUARY MUNICH, GERMANY

MUNICH SECURITY CONFERENCE 2025 An international conference dedicated to global security and foreign policy issues. Key topics include cybersecurity, energy security, and international cooperation in crisis management. The conference features open discussions, expert assessments, and closed sessions for policymakers and specialists.

Website: securityconference.org

FEBRUARY

GENEVA NET ZERO SYMPOSIUM: ADVANCING THE BAKU TO BELEM ROADMAP, PALAIS DES NATIONS The goal of this symposium is to inspire optimism and innovation in the Net Zero space. By focusing on big ideas, actionable solutions, and the latest promising developments, the event seeks to create a constructive atmosphere that fosters collaboration and a shared sense of purpose.

Website: https://indico.un.org/ event/1015813/overview

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BANGKOK, THAILAND

24-28

FEBRUARY

ASIA-PACIFIC FORUM ON SUSTAINABLE DEVELOPMENT 2025 The Asia-Pacific Forum on Sustainable Development (APFSD) is an annual, inclusive intergovernmental forum to support follow-up and review of progress on the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs) at the regional level.

Website: https://www.unescap.org/ events/apfsd12#

KOWLOON, HONG KONG

27

FEBRUARY

DIGITAL ASSETS WEEK HONG KONG 2025 This event will explore the future of digital assets, including tokenization, CBDCs, and stablecoins. Participants will gain insights into new applications of technology in finance and trends in digital currency regulation. It is a unique opportunity to connect with industry leaders and explore innovative business solutions.

Website: daweek.org

PHOTO: PXHERE.COM

GENEVA, SWITZERLAND

25

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BUCHAREST, ROMANIA

BERLIN, GERMANY

2-3

MARCH

The leading international travel industry exhibition, bringing together professionals to discuss trends and innovations.

Special attention will be given to digital tourism solutions and sustainable development. Attendees can meet key industry players and join dedicated panels.

Website: itb.com

CRYPTO EXPO EUROPE 2025

7-15 AUSTIN, USA

3-6

3

GENEVA, SWITZERLAND

PHOTO: IRENE VILA CAPAFONS / © 2024 GSMA / MWC; NICKEVERETT1981 / ADOBE STOCK

WORLD WILDLIFE CELEBRATION 2025, PALAIS DES NATIONS The conference covers topics related to digital assets, blockchain, and Web3, including simplifying crypto wallets. The event will host workshops, roundtables, and exhibitions with industry leaders.

Attendees can learn about the latest innovations and build professional networks.

Website: https://www.wildlifeday.org/en

MARCH

ITB BERLIN 2025

The conference covers topics related to digital assets, blockchain, and Web3, including simplifying crypto wallets. The event will host workshops, roundtables, and exhibitions with industry leaders.

Attendees can learn about the latest innovations and build professional networks.

Website: cryptoexpoeurope.com

MARCH

4-6

MARCH BARCELONA, SPAIN

MOBILE WORLD CONGRESS (MWC) 2025 The largest mobile industry exhibition showcasing the latest mobile technologies and devices. Participants will see advancements in 5G, AI, IoT, and other innovative technologies. The congress offers unique opportunities for networking and launching new technologies.

Website: mwcbarcelona.com

SOUTH BY SOUTHWEST (SXSW) 2025 An annual festival combining music, film, and interactive media that attracts creative professionals from around the world. The event features performances by renowned artists, film premieres, and discussions on media and technology.

SXSW is also a platform for launching new startups and ideas.

Website: sxsw.com

10-11 NEW YORK, USA

4-6

AMSTERDAM, NETHERLANDS

MARCH

GLOBAL INVESTMENT FORUM EUROPE 2025 Description: A platform for discussing global investment opportunities, sustainable strategies, and innovative projects. The forum brings together leading investors, startup representatives, and governments to exchange ideas and insights. Topics will focus on ESG trends and the digital economy.

Website: mercer.com

MARCH

MARCH

69TH SESSION OF THE COMMISSION ON THE STATUS OF WOMEN (CSW69) In 2025, the global community will mark the thirtieth anniversary of the Fourth World Conference on Women and adoption of the Beijing Declaration and Platform for Action (1995). The sixty-ninth session of the Commission on the Status of Women will take place at United Nations Headquarters in New York from 10 to 21 March 2025 Website: https://www.unwomen.org/ en/how-we-work/commission-on-thestatus-of-women/csw69-2025

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22

MARCH BANGALORE, INDIA

WORLD CONFERENCE ON ENTREPRENEURSHIP IN HIGHPOTENTIAL ECONOMIES IN THE DIGITAL ERA The conference gathers scholars, entrepreneurs, and students to discuss innovative solutions and plans for the digital age. Topics include digital economy, startups, and technology management. Attendees can exchange ideas, present research, and find partners for new projects.

Website: sfe.net.in

11

MARCH

4TH FORUM ON CARBON NEUTRALITY GOALS OF CHINA, JAPAN, AND THE REPUBLIC OF KOREA Since its inception in 2021, the Forum on Carbon Neutrality Goals of China, Japan, and the Republic of Korea has served as a pivotal platform for outlining strategic actions, identifying priorities, and addressing challenges in the transition to carbon neutrality.

Building on the progress and discussions from previous forums, the 4th Forum aims to continue the momentum by emphasizing smart and inclusive solutions for sustainable urban development that align with net-zero emissions goals.

Website: https://www.unescap.org/ events/2025/4th-forum-carbon-neutrality-goals-china-japan-and-republic-korea

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WEJ | February-March 2025

GENEVA, SWITZERLAND

17-19 MARCH

14TH INTERNATIONAL DEBT MANAGEMENT CONFERENCE The Debt Management Conference provides a biennial forum for sharing experiences and exchanging views among Governments, international organizations, academia and civil society on current developments in the debt landscape in developing countries and on debt management issues in the broader macroeconomic context.

Website: https://unctad.org/meeting/ international-debt-management-conference-fourteenth-session

NUKUS, UZBEKISTAN

24

MARCH

INTERNATIONAL CONFERENCE ON MANAGEMENT, BUSINESS AND ECONOMICS This conference focuses on management, business, and economics, providing a platform for sharing experiences and best practices. The program includes keynote speeches, panel discussions, and analysis of key industry challenges.

Attendees can establish new professional contacts and learn about contemporary trends.

Website: isit.org.in

PHOTO: CEESEVEN / CC BY-SA 4.0,; VISHWASA NAVADA / UNSPLASH

SHENZHEN, CHINA

WORLD ECONOMIC JOURNAL

OXFORD, UNITED KINGDOM

7-9

27-29 MARCH

ABU DHABI, UAE

8TH INTERNATIONAL CONFERENCE ON BUSINESS, MANAGEMENT AND FINANCE

APRIL

ANNUAL INVESTMENT MEETING (AIM) 2025 AIM is a global platform bringing together investors, government entities, and international organizations to discuss economic prospects.

Website: aimcongress.com

This conference offers valuable insights through detailed sessions, research presentations, and publication opportunities.

Website: icbmf.org

KUALA LUMPUR, MALAYSI

10-11 APRIL

ASIA-PACIFIC BUSINESS FORUM (APBF) 2025

31 MARCH 4 APRIL HANNOVER, GERMANY

PHOTO: BEN SEYMOUR / UNSPLASH; RAINER JENSEN / HANNOVER MESSE

HANNOVER MESSE 2025

26

WASHINGTON, D.C., USA

MARCH

Hannover Messe presents state-of-theart industrial technologies, including automation, robotics, and AI. The 2025 theme focuses on sustainable production and digitalization in industries.

Participants can connect with global leaders in the field and explore specialized exhibition areas.

Website: hannovermesse.de

7-11

DC BLOCKCHAIN SUMMIT 2025 The DC Blockchain Summit gathers blockchain and digital asset leaders with policymakers and regulators to discuss the future of technology. Topics include regulation, blockchain integration in public systems, and the evolution of digital currencies. This summit serves as a critical platform for addressing global challenges and opportunities in the blockchain industry.

Website: dcblockchainsummit.com

NEW YORK, USA

APRIL

58TH SESSION OF THE COMMISSION ON POPULATION AND DEVELOPMENT (CPD58) Ensuring healthy lives and promoting well-being for all at all ages Website: www.unpopulation.org https://www.un.org/development/ desa/pd/events/CPD58

ESCAP and the ESCAP Sustainable Business Network (ESBN) together with the KSI Strategic Institute for Asia-Pacific, Malaysia, will jointly organize the Asia-Pacific Business Forum (APBF) 2025 in Kuala Lumpur, Malaysia. The theme of APBF 2025 is “Advancing Sustainability, Enhancing Partnership for the Asia-Pacific Green Deal”.

Website: https://www.unescap.org/ events/2025/asia-pacific-business-forum-2025

GENEVA, SWITZERLAND

30

APRIL

NEW SDG LAB LAUNCH EVENT With less than six years remaining to 2030, we stand at a crossroads where simply understanding and promoting sustainability is not enough. Building on the progress brought about the SDGs, we are compelled to go Beyond, to explore how we—both within the UN and outside—can embody the change we aspire to see in the world.

Website: https://indico.un.org/ event/1011102/

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[ WORDS ]

"We must strengthen our sense of hardship, adhere to the bottom-line thinking, be prepared for danger in times of peace, prepare for a rainy day, and be ready to withstand major tests of high winds and high waves."

Xi Jinping, General Secretary of the Chinese Communist Party Incumbent

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GLOBAL INITIATIVE FOR SUSTAINABLE DEVELOPMENT OF TERRITORIAL ENTITIES #SDGAction33410