Global Overview | Perspectives from Around the World | Middle East & Africa Summit 2023

Key Global Drivers and Economic Shifts

• Michael Milken identifies five primary drivers shaping the global economy through 2024: education, demographics, health, financial markets, and sustainability.
• Technology underpins all identified drivers, with the digital revolution shifting the economic center of gravity from the industrial-era North to emerging markets.
• The private equity sector now controls more than 50% of companies of any size in the United States, creating potential vulnerabilities for operationally sound companies due to capital structure challenges.
• Medical research and public health have driven over 50% of global economic growth in the 21st century, with life expectancy rising from 31 years in the early 20th century to the low-to-mid 70s today.
• Global economic power has shifted significantly; whereas North America, Japan, and Europe accounted for 80% of the world economy with 20% of the population in the past, they now represent less than 50% of the global economy.

Demographic Trends and Regional Divergence

• Nigeria: Birth rates are so high that more children are born annually in Nigeria alone than in all of South America, North America, and Europe combined.
• East Asia: South Korea sees 50% of women intending to have no children, Japan mirrors this trend, and China's birth rate has dropped 60%, falling from 25 million births in the past to under 10 million in 2022.
• India: The country has 450 million people under age 30 and 23 million babies born annually, though fertility is dropping to 2.0 nationally and as low as 1.6-1.7 in southern regions.
• Africa: The continent faces a "demographic dividend" with 400 million youth aged 15-25, which risks becoming a "demographic time bomb" without corresponding education and job creation.
• Latin America: Colombia projects its population over 65 will triple from 5 million to 15 million within three decades, creating a fiscal crisis due to a large informal economy lacking social security.

Regional Opportunities and Challenges

• Latin America:
  • 2023 is projected to be the highest year for foreign direct investment (FDI) in the region's history.
  • Mexico is projected to surpass China to become the United States' number one trading partner for the first time in 20 years, driven by nearshoring trends.
  • The region possesses 15% of the world's arable land and 23% of the world's forests, positioning it as a critical hub for global food security.
  • Potential for renewable energy is massive, with almost 200 gigawatts of solar and wind capacity available for conversion to green hydrogen or green ammonia.
  • Financial inclusion is a key success story, with 70% of adults across the region now holding at least one financial product, rising to over 85% in countries like Brazil and Mexico.
  • Ivan Duque forecasts 2024 in the region will be defined by the interaction of CCT: Climate, Conflict, and Technology.
• India:
  • The "India Stack" digital public infrastructure has facilitated 400 billion dollars in transfers, opened 500 million bank accounts, and enabled free food distribution to 800 million people.
  • 42% of all global digital payments now occur in India, with 20 billion payments processed annually at near-zero cost.
  • India and China follow divergent models: India is highly diverse with 1,600 languages, 50 political parties, and 900 million voters in its most recent election, whereas China operates as a homogenous, centrally dictated economy.
  • The top 10 most valuable global companies are 80% digital, signaling a complete restructuring of how business connects producers to consumers.
• Africa:
  • Investment interest is high, with a partnership between African Rainbow Minerals and Allianz's Sunlume managing $120 billion in assets across the continent.
  • Perceptions of low liquidity are challenged by the emergence of highly educated, globally mobile young African professionals and increased institutional investment.
  • Mahandas Pai notes that while India offers massive scale, its high confidence levels have led to overpriced assets, prompting investors to seek "discounts" elsewhere.

Leadership, Geopolitics, and Future Outlook

• Polarization: Becky Anderson warns that rising political polarization in the US, Europe, and the Middle East is eroding the ability to bridge divides that previously facilitated consensus on foreign and domestic policy.
• Climate Action: The world is off track to meet 2030 Nationally Determined Contributions (NDCs), with a likely temperature rise exceeding 1.5°C, necessitating immediate political consensus.
• Climate Migration: Over 5 million climate-driven migrants are expected to move next year, creating significant pressure on governmental systems.
• US Leadership: Michael Milken argues that while the US share of the global economy may decline, its moral leadership remains critical, noting that US demographics are shifting dramatically, with the majority of non-born-in-US residents now hailing from Latin America, Asia, or Africa.
• Health Risks: Sub-Saharan Africa remains the primary epicenter for global health challenges, particularly regarding AIDS transmission rates and the potential for a 50% reduction in transmission within two generations.
• Conflict Zones: Significant uncertainty surrounds Ukraine's 2024 elections and funding needs, as well as the Middle East, where the Abraham Accords' potential for a two-state solution is threatened by current instability.
• Sustainability: 50% of all global warming increases are linked to the food chain, suggesting a pivotal future for plant-based diets and laboratory-grown food production.
• Financial Returns: The Indian Stock Exchange has delivered 12% returns in dollars over the last 30 years, making it the only market competitive with the US for long-term investment performance.