Markets

Mapped: The World’s Top 10 Cities in 2035

Published

4 years ago

October 18, 2019

Iman Ghosh

Mapped: The World's Top 10 Cities in 2035

Mapped: Where Will The Top 10 Cities Be in 2035?

Cities are the engines of the modern economy. Over half of the world now lives in urban areas, and urbanization continues to shape the trajectory of global growth in unprecedented ways.

However, the most important cities of today may be quite different than those leading the charge in the future. This week’s chart looks forward to 2035, using a report by Oxford Economics to forecast the top 10 cities by measures of economic size, population, and GDP growth rate.

Each map is categorized by one of these metrics—and depending on which one you look at, the leaders vary greatly.

Top 10 Cities by Projected GDP

The top 10 cities by gross domestic product (GDP) in 2035 will be fairly widespread. Three cities are expected to be in the U.S.—New York, Los Angeles, and Chicago. The Big Apple’s forecasted $2.5 trillion GDP likely stems from its strong banking and finance sectors.

Rank	City	Country	2035 GDP
#1	New York	🇺🇸 United States	$2.5T
#2	Tokyo	🇯🇵 Japan	$1.9T
#3	Los Angeles	🇺🇸 United States	$1.5T
#4	London	🇬🇧 United Kingdom	$1.3T
#5	Shanghai	🇨🇳 China	$1.3T
#6	Beijing	🇨🇳 China	$1.1T
#7	Paris	🇫🇷 France	$1.1T
#8	Chicago	🇺🇸 United States	$1.0T
#9	Guangzhou	🇨🇳 China	$0.9T
#10	Shenzhen	🇨🇳 China	$0.9T

Four cities will be found in China, while London, Paris, and Tokyo are set to round out the last three. Interestingly, Tokyo is the #1 city today, with an estimated $1.6 trillion GDP in 2019.

Altogether, these top 10 cities will contribute an impressive $13.5 trillion in GDP by 2035. Clusters of such metropolitan areas are typically considered megaregions—which account for a large share of global economic activity.

Top 10 Cities by Future Population

Next, it’s clear that top cities by population will follow a distinct global distribution. By 2035, the most highly-populated cities will shift towards the East, with seven cities located in Asia.

Rank	City	Country	2035 Population
#1	Jakarta	🇮🇩 Indonesia	38 million
#2	Tokyo	🇯🇵 Japan	37.8 million
#3	Chongqing	🇨🇳 China	32.2 million
#4	Dhaka	🇧🇩 Bangladesh	31.2 million
#5	Shanghai	🇨🇳 China	25.3 million
#6	Karachi	🇵🇰 Pakistan	24.8 million
#7	Kinshasa	🇨🇩 DR Congo	24.7 million
#8	Lagos	🇳🇬 Nigeria	24.2 million
#9	Mexico City	🇲🇽 Mexico	23.5 million
#10	Mumbai	🇮🇳 India	23.1 million

While Jakarta’s 38 million-strong population is expected to emerge in first place, the city may not retain its status as Indonesia’s capital for much longer. Rising sea levels and poor water infrastructure management mean that Jakarta is rapidly sinking—and the government now plans to pivot the capital to Borneo island.

On the African continent, Kinshasa and Lagos are already among the world’s largest megacities (home to over 10 million people), and will hold top spots by the turn of the century.

Population and demographics can be major assets to a country’s growth. For example, India’s burgeoning working-age demographics will present a unique advantage—and the country is projected to contain several of the fastest growing cities in the coming years.

Top 10 Cities By Estimated Annual GDP Growth

When comparing cities based on their pace of economic growth, there are some clear standouts. Average annual GDP growth across cities is 2.6%, but the top 10 surpass this by a fair amount.

The kicker? All of 2035’s major players will be found in Asia: four of the fastest-growing cities will be in mainland China, another four in India, and the last two in Southeast Asia.

Rank	City	Country	Annual Growth
#1	Bengaluru	🇮🇳 India	8.5%
#2	Dhaka	🇧🇩 Bangladesh	7.6%
#3	Mumbai	🇮🇳 India	6.6%
#4	Delhi	🇮🇳 India	6.5%
#5	Shenzhen	🇨🇳 China	5.3%
#6	Jakarta	🇮🇩 Indonesia	5.2%
#7	Manila	🇵🇭 Philippines	5.2%
#8	Tianjin	🇨🇳 China	5.1%
#9	Shanghai	🇨🇳 China	5.0%
#10	Chongqing	🇨🇳 China	4.9%

At #1 by 2035 is Bangalore with an expected 8.5% annual growth forecast—its high-quality talent pool makes the city a breeding ground for tech startups. Jakarta makes another appearance, with its projected 5.2% growth at double the city average.

Shanghai finds its way onto all three lists. The commercial capital hosts the world’s busiest port, and one of China’s two major stock exchanges. These sectors could help boost Shanghai’s annual GDP growth to 5% in 2035.

Looking to the Future

Of course, any number of variables could impact these 2035 projections, from financial recessions and political uncertainty, to rapid urbanization and technological advances.

But one thing’s certain—in the coming decades, cities are where many of these factors will converge and play out.

Related Topics:china africa india GDP demographics cities population asia GDP growth top cities annual growth

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Markets

Recession Risk: Which Sectors are Least Vulnerable?

We show the sectors with the lowest exposure to recession risk—and the factors that drive their performance.

Published

18 hours ago

November 29, 2023

Dorothy Neufeld

Recession Risk: Which Sectors are Least Vulnerable?

This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.

In the context of a potential recession, some sectors may be in better shape than others.

They share several fundamental qualities, including:

Less cyclical exposure
Lower rate sensitivity
Higher cash levels
Lower capital expenditures

With this in mind, the above chart looks at the sectors most resilient to recession risk and rising costs, using data from Allianz Trade.

Recession Risk, by Sector

As slower growth and rising rates put pressure on corporate margins and the cost of capital, we can see in the table below that this has impacted some sectors more than others in the last year:

Sector	Margin (p.p. change)
🛒 Retail	-0.3
📝 Paper	-0.8
🏡 Household Equipment	-0.9
🚜 Agrifood	-0.9
⛏️ Metals	-0.9
🚗 Automotive Manufacturers	-1.1
🏭 Machinery & Equipment	-1.1
🧪 Chemicals	-1.2
🏥 Pharmaceuticals	-1.8
🖥️ Computers & Telecom	-2.0
👷 Construction	-5.7

*Percentage point changes 2021- 2022.

Generally speaking, the retail sector has been shielded from recession risk and higher prices. In 2023, accelerated consumer spending and a strong labor market has supported retail sales, which have trended higher since 2021. Consumer spending makes up roughly two-thirds of the U.S. economy.

Sectors including chemicals and pharmaceuticals have traditionally been more resistant to market turbulence, but have fared worse than others more recently.

In theory, sectors including construction, metals, and automotives are often rate-sensitive and have high capital expenditures. Yet, what we have seen in the last year is that many of these sectors have been able to withstand margin pressures fairly well in spite of tightening credit conditions as seen in the table above.

What to Watch: Corporate Margins in Perspective

One salient feature of the current market environment is that corporate profit margins have approached historic highs.

Recession Risk: Corporate Margins Near Record Levels

As the above chart shows, after-tax profit margins for non-financial corporations hovered over 14% in 2022, the highest post-WWII. In fact, this trend has been increasing over the past two decades.

According to a recent paper, firms have used their market power to increase prices. As a result, this offset margin pressures, even as sales volume declined.

Overall, we can see that corporate profit margins are higher than pre-pandemic levels. Sectors focused on essential goods to the consumer were able to make price hikes as consumers purchased familiar brands and products.

Adding to stronger margins were demand shocks that stemmed from supply chain disruptions. The auto sector, for example, saw companies raise prices without the fear of diminishing market share. All of these factors have likely built up a buffer to help reduce future recession risk.

Sector Fundamentals Looking Ahead

How are corporate metrics looking in 2023?

In the first quarter of 2023, S&P 500 earnings fell almost 4%. It was the second consecutive quarter of declining earnings for the index. Despite slower growth, the S&P 500 is up roughly 15% from lows seen in October.

Yet according to an April survey from the Bank of America, global fund managers are overwhelmingly bearish, highlighting contradictions in the market.

For health care and utilities sectors, the vast majority of companies in the index are beating revenue estimates in 2023. Over the last 30 years, these defensive sectors have also tended to outperform other sectors during a downturn, along with consumer staples. Investors seek them out due to their strong balance sheets and profitability during market stress.

S&P 500 Sector	Percent of Companies With Revenues Above Estimates (Q1 2023)
Health Care	90%
Utilities	88%
Consumer Discretionary	81%
Real Estate	81%
Information Technology	78%
Industrials	78%
Consumer Staples	74%
Energy	70%
Financials	65%
Communication Services	58%
Materials	31%

Source: Factset

Cyclical sectors, such as financials and industrials tend to perform worse. We can see this today with turmoil in the banking system, as bank stocks remain sensitive to interest rate hikes. Making matters worse, the spillover from rising rates may still take time to materialize.

Defensive sectors like health care, staples, and utilities could be less vulnerable to recession risk. Lower correlation to economic cycles, lower rate-sensitivity, higher cash buffers, and lower capital expenditures are all key factors that support their resilience.