Economic Recovery Post-Pandemic

Reflecting on a busy and eventful 2024, I wanted to share my key takeaways from this year’s engagements and speeches. 𝟭. 𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗚𝗹𝗼𝗯𝗮𝗹 𝗣𝘂𝗯𝗹𝗶𝗰 𝗗𝗲𝗯𝘁 𝗟𝗲𝘃𝗲𝗹𝘀 Global public debt has grown sizably over the last few years and is projected to approach 100% of GDP by the end of this decade. We need a strategic pivot in global fiscal policy – ensuring that governments will have the resources needed to invest in structural transformations, including climate change, and to fight the next crisis. Countries need a strategy that focuses on growth, that has effective guardrails to ensure compliance, and that builds in close engagement with all stakeholders including civil society to have the greatest chance at success. More here: https://lnkd.in/gw3uswMS   𝟮. 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻, 𝗖𝗼𝗻𝗳𝗹𝗶𝗰𝘁, 𝗮𝗻𝗱 𝗟𝗮𝗿𝗴𝗲 𝗦𝗵𝗼𝗰𝗸𝘀 Russia’s invasion of Ukraine has had a profound impact. This conflict not only affected Ukraine and its neighbors but also reshaped the global economy. Increased fragmentation and higher defense spending are now realities we must navigate. Central banks need to adapt their strategies, and coordinated fiscal, financial, and structural policies are crucial to maintain macroeconomic stability in this more shock-prone environment. More here: https://lnkd.in/gm4yUHhq 𝟯. 𝗚𝗲𝗼𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝘀 𝗮𝗻𝗱 𝗶𝘁𝘀 𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝗚𝗹𝗼𝗯𝗮𝗹 𝗧𝗿𝗮𝗱𝗲 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗗𝗼𝗹𝗹𝗮𝗿 The pandemic and geopolitical tensions have led countries to reassess their trading partners and economic strategies. There's a noticeable shift in foreign direct investment flows along geopolitical lines. These changes underscore the dynamic nature of global trade and the need for adaptable economic policies. More here: https://lnkd.in/g9cbVUjQ 𝟰. 𝗖𝗿𝗶𝘀𝗶𝘀 𝗔𝗺𝗽𝗹𝗶𝗳𝗶𝗲𝗿? 𝗛𝗼𝘄 𝘁𝗼 𝗣𝗿𝗲𝘃𝗲𝗻𝘁 𝗔𝗜 𝗳𝗿𝗼𝗺 𝗪𝗼𝗿𝘀𝗲𝗻𝗶𝗻𝗴 𝘁𝗵𝗲 𝗡𝗲𝘅𝘁 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗗𝗼𝘄𝗻𝘁𝘂𝗿𝗻 While AI can drive efficiency, it can also pose risks, especially during economic downturns. In the next downturn, AI could threaten a wider range of jobs than in past cycles. AI systems, trained on past data, may struggle with novel events, potentially exacerbating financial instability. To mitigate these risks, we must ensure tax systems do not favor automation over people, support workers affected by AI, and adopt measures to reduce financial and supply-chain amplification risks. More here: https://lnkd.in/gnM-XZtC   As we move into 2025, these challenges will remain top of mind as we work to foster a more resilient global economy. Wishing you all a prosperous and impactful new year!

📊 Exciting new research from the European Central Bank (ECB) sheds light on how banks are pricing climate risk in their lending practices! 🌿 In their working paper, Carlo Altavilla, Miguel Boucinha, Marco Pagano, and Andrea Polo combine euro-area credit register data with carbon emission information to uncover fascinating insights into the intersection of finance and climate change. 🏦 The study finds that banks are indeed factoring climate risk into their lending decisions. Firms with higher carbon emissions face higher interest rates, while those committed to reducing emissions enjoy lower rates. Interestingly, banks that have publicly committed to decarbonization goals (through initiatives like Science Based Targets initiative) are even more aggressive in this pricing strategy. 💶 But here's where it gets really intriguing: the researchers uncovered a "climate risk-taking channel" of monetary policy. When the ECB tightens monetary policy, banks not only increase their overall credit risk premiums but also amplify their climate risk premiums. This means that during periods of monetary tightening, high-emission firms face a double whammy of increased borrowing costs and reduced access to credit compared to their greener counterparts. The authors argue that while restrictive monetary policy may slow down overall decarbonization efforts, it inadvertently creates a more favourable environment for low-emission firms and those committed to going green. 🌍 These findings are crucial for understanding how the financial sector is adapting to climate change and how monetary policy interacts with climate-related financial risks. It's also clear that the greening of finance is not just a trend, but a fundamental shift in how risk is assessed and priced in our economy. #ClimateFinance #SustainableBanking #MonetaryPolicy #ECB #GreenEconomy #ClimateRisk

Teleperformance is the world's largest customer service outsourcing company. Revenue: over 10 billion euros. Nearly 500,000 employees. Operations in 100 countries. Their stock is down 88% from its peak. Not because revenue collapsed. Revenue was EUR 10.2 billion last year, essentially flat. The market just stopped believing in the model. In January 2022, Teleperformance traded at €402 per share. Today it is under €50. Down 88%. Concentrix, the second largest, peaked at $208. Today it is $26. Down 87%. TTEC peaked at $113. Today it is $2.30. Down 98%. All three of the largest public customer service outsourcing companies have lost 87 to 98% of their peak value. Meanwhile, Sierra, one of our direct competitors, was founded 2 years ago. $100M in annual revenue in 21 months. Valued at $10 billion. Legacy BPOs trade at 0.5 to 1.5x revenue. AI-native CX companies trade at 20 to 100x. That is not a correction. That is a replacement being priced in. The math is simple. A human agent costs $4 to $8 per interaction. An AI agent costs under $1. And it runs at 2am on a Sunday. BPO companies know this. Teleperformance launched an AI platform. Concentrix built an AI suite. TTEC deployed AI across 100+ programs. But retrofitting AI onto a labor-arbitrage business model is like putting a motor on a horse. You still have a horse. I have been building AI agents for customer support for 3 years. I watch this play out every single week. The $300 billion outsourcing industry was built on cheap labor in favorable time zones. AI agents work at software speed, 24/7, for a fraction of the cost. This does not mean every BPO dies. The smart ones are evolving. They manage AI, offer CX consulting, and still provide great people for the cases that need a human touch. The human roles that remain are moving closer to the brand, in-house, onshore. But selling labor arbitrage at scale, hundreds of thousands of agents doing repetitive work in a low-cost country, that model is over. Most large BPOs are still profiting from multi-year contracts signed before the AI wave. When those contracts expire in 2026 and 2027, clients will either walk or demand 50% price cuts. Gadi Shamia, CEO of Replicant (a voice AI company), expects at least one top-10 BPO to file for bankruptcy. I would not bet against him. EUR 10 billion in revenue. 88% of market cap gone. The market already decided.

🚨New study on Climate and Inequality 🚨 Thrilled to share that our latest paper, "Climate Change and the Global Distribution of Wealth", has just been published in Nature Climate Change! In this work, we explore how climate change and climate policies are reshaping wealth inequality worldwide. Our findings reveal that climate impacts and investments could significantly alter the distribution of wealth, affecting everything from housing to financial assets. For instance, we show that the top 1% global wealth share could rise from around 38.5% today to 46% in 2050 if the wealthiest individuals own all the new low-carbon infrastructure. Conversely, if low-carbon investments are financed by a tax on the top 1% and then owned by governments or not-for-profit actors, the top 1% wealth share could drop to 26%. Climate change and climate investments have the potential to reshape global wealth inequalities on an unprecedented scale. It’s going to be critical to keep an eye on this. Thanks to our incredible team (Cornelia Mohren, Philip Bothe and Gregor Semieniuk) and all those who supported this work. Comments welcome! Published article : https://lnkd.in/ehQVkEQC Open-access preprint : https://lnkd.in/ePzdtCFQ

New report shows climate action could boost, not weaken, economic growth 🌎 A new joint report by the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP) concludes that taking strong action to address the climate crisis will lead to increased economic growth, challenging the common argument that climate policies hinder financial performance. The report finds that setting ambitious emissions reduction targets and implementing the necessary policies would result in a net gain of 0.23% in global GDP by 2040. This gain becomes even more significant when factoring in the avoided economic losses caused by unchecked climate change. The long-term economic benefits of climate action are particularly notable. By 2050, the most advanced economies could see a 60% increase in GDP per capita compared to 2025, while lower-income countries could experience a 124% rise. In the shorter term, investing in emissions reductions would lift an estimated 175 million people out of poverty by 2030, showing that climate action also has a significant social impact. In contrast, failing to act could result in the loss of up to one-third of global GDP over the course of the century. UNDP Executive Secretary Achim Steiner emphasized that investing in the transition to a low-carbon economy does not lead to regression but rather to modest and accelerating GDP growth. UN Climate Chief Simon Stiell also warned of the economic consequences of inaction, particularly for Europe. He projected that extreme weather and climate-related impacts could shrink the European economy by 2.3% annually by 2050, with cumulative effects comparable to a permanent state of recession. Stiell underscored that the climate crisis should be viewed as a national security issue, as increasing climate-related disasters threaten food security, displace populations, and destabilize regions. He noted that unlike the 2008 financial crisis, which had a finite duration, climate-induced economic contraction could persist indefinitely, eroding economies year after year. The risk of widespread unlivable regions and forced migration further adds to the urgency of coordinated global climate action. #sustainability #sustainable #business #esg #climatechange

The rules of global manufacturing have changed.   For decades, the playbook was simple: build production where labor costs were the lowest. Today, manufacturing companies face a complex array of factors that are forcing them to fundamentally rethink where and how they produce goods.   What are the five key forces shaping this new era of manufacturing?   🌍 Geopolitical tensions: Growing protectionism, trade wars, and strategic competition are forcing companies to reduce dependencies 👥 Workforce demographics: While China and Europe face aging workforces, countries like India and Mexico offer growing labor pools 🤖 Automation trends: Robot costs have plummeted by 85% over the past two decades while installations have increased fivefold ⚡ Energy costs: European electricity prices have doubled since 2008 and are now 250% higher than those in the US and China 🌱 Raw materials access: The energy transition and digitalization are driving demand for critical raw materials, with supply chains often concentrated in specific countries   To successfully navigate this complex landscape, manufacturing companies must adopt new frameworks for decision-making. In our latest report, our experts introduce the #RolandBerger 3E Framework (Envision, Explore, Executive) – a comprehensive approach for redesigning your production footprint for a profitable and resilient future.   Explore the full report here: https://lnkd.in/eGKhNuwf

In 2005, when Thomas Friedman proclaimed “the world is flat,” globalisation appeared irreversible. The fall of the Berlin Wall, China’s entry into the WTO, the rise of the internet and the spread of global supply chains compressed distance and time. The assumption was that economic integration would lead to rising prosperity and a shared stake in stability for everyone. Two decades later, the world looks anything but flat. The 2008 global financial crisis was the first fracture. It exposed how deeply interconnected the system was, but also how unevenly its risks and rewards were distributed. Inequality widened within countries even as millions were lifted out of poverty globally. Then came geopolitics. Supply chains that had been optimised for cost and efficiency began to be seen as vulnerabilities. The pandemic delivered the shock therapy as Governments discovered how dependent they were on distant factories for essential goods. During the era of “hyper-globalisation” (1990–2008), global trade grew almost twice as fast as world GDP. After the global financial crisis, trade still grows, but no longer faster than the world economy. Capital flows tell a similar story. Foreign direct investment peaked before 2008 at over 5% of global GDP and has since fallen to roughly half that level, while becoming more volatile and more nuanced. Investment is more regional, more strategic and less frictionless. Supply chains, once optimised ruthlessly for cost, are now being redesigned for resilience. This shift from efficiency to redundancy leads to structurally higher costs and more inflation volatility. If globalisation delivered such clear economic benefits, what caused its slowdown? The core reason is not economic failure, but political. Globalisation grew global output, but it did not distribute gains evenly within countries. In many economies, wages stagnated even as profits and asset prices rose. Communities lost jobs faster than they gained new ones. This domestic backlash then collided with geopolitics. The pandemic and the war in Ukraine reinforced the lesson: efficiency without control can be dangerous. The deeper issue was institutional. Capital moved freely but safety nets remained national. When shocks hit, citizens turned to governments, not global systems, for protection. The implications for the global economy are profound. Growth is becoming more fragmented, less synchronised. Inflation is likely more volatile. The world economy looks less like a single engine and more like loosely connected regional systems. What lies ahead is not de-globalisation, but re-globalisation with constraints. A world of blocs, buffers and “trusted” networks. Less flat, more uneven. Less efficient, more resilient. The age of frictionless globalisation may be over, but interdependence is not. The challenge now is managing it without letting fragmentation become the new systemic risk.

Reindustrialization has firmly entered the mainstream. Today, nearly three‑quarters of large organizations are reshaping their manufacturing and supply chains through friendshoring, nearshoring or reshoring - up from fewer than 60% just two years ago. What’s changing now is the nature of the investment. While overall spending is easing, decisions are becoming far more deliberate and targeted - focused on striking the right balance between limiting dependency risks and strengthening market competitiveness.   The Capgemini Research Institute’s latest report, “The resurgence of manufacturing: Reindustrialization strategies in Europe and the US, 2026”, offers essential insight into the forces and context shaping technology investment and transformation today.   These themes will, no doubt, be front and center this week at #HannoverMesse2026, where resilient, sustainable manufacturing and operations are no longer optional - they are strategic imperatives.   Read more about the report here: https://lnkd.in/ed-QMzcH

Climate change is no longer an environmental debate. It is an economic variable. The Strategic Study on the Economic Impacts of Climate Change in Brazil, developed under the Brazil 2050 Strategy, delivers a clear message: the cost of inaction exceeds the cost of adaptation. Agriculture emerges as one of the primary transmission channels of climate risk to the broader economy. When productivity declines, the effects ripple outward: food inflation, reduced income, food insecurity, and loss of international competitiveness. For this reason, more ambitious climate policies are not a cost. They are economic protection. The 2°C scenario represents a critical inflection point. It requires coordinated action, yet it preserves productive capacity, macroeconomic stability, and food security. Within this space, the private sector plays a decisive role. In our case, this means transforming climate risk into operational efficiency. The Renove Program is a practical example: pasture restoration, sustainable intensification, improved productivity per hectare, and reduced pressure on new natural resources. This is adaptation in the field, with direct impact on emissions, efficiency, and competitiveness. In addition, we continue to advance through: • Consistent investments in renewable energy • Reduction in natural resource use throughout the value chain • Rigorous standards in quality, traceability, and operational efficiency • Innovation applied to sustainable production Food security and climate policy move together. In a world shaped by geopolitical tensions, food is a strategic asset. Access the full study: https://lnkd.in/dq7carKH

"A third of global GDP could be lost this century, if the #climate crisis were allowed to run unchecked." An upcoming OECD - OCDE | United Nations Development Programme (UNDP) report on the case for enhanced NDCs (Nationally Determined Contributions) reiterates the #economic realities of investing in #ClimateAction and the cost of inaction. At a time where climate #leadership is arguably more about staying the course and reaffirming commitment, the overview, presented at the at the 2025 Petersberg Climate Dialogue, reminds us of what we know to be true, not the myths that are currently being popularised. Some highlights from the key messages shared in Berlin over the past couple of days: ➡️ "Clean energy markets have rapidly expanded, 𝙛𝙪𝙚𝙡𝙡𝙚𝙙 𝙛𝙞𝙧𝙨𝙩 𝙗𝙮 𝙥𝙤𝙡𝙞𝙘𝙮 𝙖𝙣𝙙 𝙩𝙝𝙚𝙣 𝙢𝙖𝙧𝙠𝙚𝙩 𝙙𝙚𝙢𝙖𝙣𝙙... 𝙋𝙤𝙡𝙞𝙘𝙮 𝙪𝙣𝙘𝙚𝙧𝙩𝙖𝙞𝙣𝙩𝙮 𝙬𝙚𝙖𝙠𝙚𝙣𝙨 𝙞𝙣𝙫𝙚𝙨𝙩𝙢𝙚𝙣𝙩 𝙖𝙣𝙙 𝙨𝙡𝙤𝙬𝙨 𝙜𝙧𝙤𝙬𝙩𝙝." Setting aside the of shortcomings of leaving 'the market' to drive #ClimateAction, it's important to recognise that a market-based approach still requires #policy intervention is clear and critical. The reality is that the world we currently live in, the norms we have become used to, have all been driven by historic #policy decisions, #investments and #subsidies. The only way we will start to rebalance 'the market' is by addressing, reversing and repositioning those policy settings. ➡️ "A low-carbon economy 𝙞𝙨 𝙖 𝙢𝙤𝙧𝙚 𝙚𝙛𝙛𝙞𝙘𝙞𝙚𝙣𝙩 𝙚𝙘𝙤𝙣𝙤𝙢𝙮." At a time where all organisations are facing pressure to reduce costs and streamline in order to survive, the opportunities of a low-carbon economy, of designing out waste and finding the most efficient use of resources and energy, are broad and wide-ranging. ➡️ "Climate action delivers far-reaching 𝙗𝙚𝙣𝙚𝙛𝙞𝙩𝙨 𝙗𝙚𝙮𝙤𝙣𝙙 𝙂𝘿𝙋 𝙜𝙧𝙤𝙬𝙩𝙝... Actual benefits could be even greater, as uncertain 𝙘𝙪𝙧𝙧𝙚𝙣𝙩 𝙚𝙨𝙩𝙞𝙢𝙖𝙩𝙚𝙨 𝙙𝙤 𝙣𝙤𝙩 𝙛𝙪𝙡𝙡𝙮 𝙖𝙘𝙘𝙤𝙪𝙣𝙩 𝙛𝙤𝙧 𝙩𝙝𝙚 𝙚𝙘𝙤𝙣𝙤𝙢𝙞𝙘 𝙖𝙣𝙙 𝙨𝙤𝙘𝙞𝙖𝙡 𝙘𝙤𝙣𝙨𝙚𝙦𝙪𝙚𝙣𝙘𝙚𝙨 𝙤𝙛 𝙩𝙝𝙚 𝙞𝙣𝙘𝙧𝙚𝙖𝙨𝙚𝙙 𝙡𝙞𝙠𝙚𝙡𝙞𝙝𝙤𝙤𝙙 𝙤𝙛 𝙘𝙧𝙤𝙨𝙨𝙞𝙣𝙜 𝙩𝙞𝙥𝙥𝙞𝙣𝙜 𝙥𝙤𝙞𝙣𝙩𝙨, such as melting ice sheets or reversing circulation patterns in the ocean." Climate action isn't just a carbon play, or an environmental play. Climate action delivers broad benefits, to #health, to energy #security and access, to #poverty reduction.