Visualizing Social Risk in the World’s Top Investment Hubs
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Visualizing Social Risk in the World’s Top Investment Hubs

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Social Risk in the World’s Top Investment Hubs

Visualizing the Social Risk of the World’s Top Investment Hubs

As social responsibility becomes an important aspect of doing business, it’s more crucial than ever for decision-makers to understand the risks associated with various global markets.

This graphic, using data from a report by Verisk Maplecroft, looks at the world’s top cities for foreign direct investment (FDI) and assesses their relative levels of social risk.

In the article below, we’ll take a look at the research methodology to explain how risk was assessed in the report and touch on some key markets that placed high on the ranking.

The Relationship Between FDI and Social Risk

To look at the relationship between FDI and social risk, the report identified the top 100 cities for FDI in 2020, using data from fDi Markets (the Financial Times’ foreign investment monitor).

From there, social risk in the top 100 FDI cities was measured using data from Verisk Maplecroft’s Cities@Risk Social Index​​. The index measures the social risk landscape of 575 different cities across the globe, using three key pillars:

  • Civil and political rights: the right to protest, security force abuses
  • Labor rights: child labor, modern slavery
  • Poverty: portion of population in extreme poverty

After calculating scores based on these three metrics, cities were then grouped into four categories to measure their level of social risk:

  • Low risk
  • Medium risk
  • High risk
  • Extreme risk

Based on this analysis, citizens in 33 of the top 100 cities for FDI (representing $71 billion of inward investment) are at ‘high’ or ‘extreme’ levels of social risk, meaning they face significant threats to their civil, political, and labor rights.

Of the top 100 places, Istanbul and Izmir rank the highest when it comes to overall human rights risks, largely because of labor rights violations and the exploitation of migrant and refugee workers. This is something manufacturers should take note of, especially those who outsource production to these Turkish cities.

In contrast, Beijing, which places third on the list, scores high due to China’s various civil rights issues. Other major manufacturing and commercial hubs in China, like Guangzhou and Shanghai, place high on the list as well.

Overall Social Risk Index

While a third of the top FDI cities are at high or extreme social risk, this figure is even higher when looking at all 575 cities included in the Cities@Risk Social Index.

social risk score of global cities

Of the 575 cities, 75% are classified as ‘high’ or ‘extreme’ risk. Mogadishu, Somalia is the highest risk city, followed by Damascus, Aleppo, and Homs in Syria, Pyongyang in North Korea, and Sanaa in Yemen.

While the high-risk cities are spread across the globe, it’s worth noting that 240 of the high and extreme risk cities are located in Asia.

Civil and Political Risk Index

In addition to the overall ranking, the report provides insight into specific human rights violations, highlighting which cities are most at risk.

civil rights risk score of global cities

Perhaps unsurprisingly, Pyongyang, North Korea places first on the list when it comes to civil and political rights violations. Under the current North Korean regime, some significant civil rights violations include arbitrary arrests and detentions, the holding of political prisoners and detainees, and a lack of judicial independence.

In addition to North Korea, Syria places high on the civil rights risk index as well, with three of the top five cities located in the war-torn country.

Labor Rights Index

When focusing specifically on labor rights, almost half of the ‘high’ or ‘extreme’ risk cities are in Europe and Central Asia.

labor rights risk score of global cities

The biggest problems across a majority of ‘high’ risk cities include child labor, the exploitation of migrant workers, and modern slavery. Pakistan in particular struggles with child labor issues, with an estimated 3.3 million children in situations of forced labor.

What This Means for Foreign Investors

Understanding a country’s social landscape can help organizations make decisions on where to conduct business, especially those that prioritize ESG efforts.

And, while organizations who invest in ‘high’ risk locations aren’t directly involved in any human rights violations, being associated with a ‘high’ risk city could impact a corporation’s reputation, or cause financial damage down the line.

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Mapped: 2023 Inflation Forecasts by Country

Inflation surged on a global scale in 2022, hitting record-level highs in many countries. Could it finally subside in 2023?

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2023 Inflation

Mapped: 2023 Inflation Forecasts by Country

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.

Inflation surged on a global scale in 2022, hitting record-level highs in many countries. Could it finally subside in 2023?

In the above infographic, we look to answer that question using the World Economic Outlook report by the International Monetary Fund (IMF).

Not Yet Out of the Woods

While the IMF predicts that global inflation peaked in late 2022, rates in 2023 are expected to remain higher than usual in many parts of the world. Following the 8.8% global inflation rate in 2022, the IMF forecasts a 6.6% rate for 2023 and 4.3% rate for 2024 based on their most recent January 2023 update.

For the optimists, the good news is that the double-digit inflation that characterized nearly half the world in 2022 is expected to be less prevalent this year. For the pessimists, on the other hand, looking at countries like Zimbabwe, Venezuela, Turkey, and Poland may suggest that we are far from out of the woods on a global scale.

Here are the countries with the highest forecasted inflation rates in 2023.

Country / RegionProjected Annual Inflation % Change 2023
🇿🇼 Zimbabwe204.6%
🇻🇪 Venezuela195.0%
🇸🇩 Sudan76.9%
🇦🇷 Argentina76.1%
🇹🇷 Turkiye51.2%
🇮🇷 Islamic Republic of Iran40.0%
🇱🇰 Sri Lanka29.5%
🇪🇹 Ethiopia28.6%
🇸🇷 Suriname27.2%
🇸🇱 Sierra Leone26.8%
🇸🇸 South Sudan21.7%
🇭🇹 Haiti21.2%
🇬🇭 Ghana20.9%
🇵🇰 Pakistan19.9%
🇳🇬 Nigeria17.3%
🇾🇪 Yemen17.1%
🇲🇼 Malawi16.5%
🇵🇱 Poland14.3%
🇲🇩 Moldova13.8%
🇲🇲 Myanmar13.3%
🇭🇺 Hungary13.3%
🇧🇾 Belarus13.1%
🇰🇬 Kyrgyz Republic12.4%
🇬🇳 Guinea12.2%
🇲🇳 Mongolia12.2%
🇪🇬 Egypt12.0%
🇦🇴 Angola11.8%
🇰🇿 Kazakhstan11.3%
🇸🇹 São Tomé and Príncipe11.2%
🇷🇴 Romania11.0%
🇺🇿 Uzbekistan10.8%
🇦🇿 Azerbaijan10.8%
🇹🇲 Turkmenistan10.5%
🇸🇰 Slovak Republic10.1%
🇨🇬 Democratic Republic of the Congo9.8%
🇿🇲 Zambia9.6%
🇪🇪 Estonia9.5%
🇲🇪 Montenegro9.2%
🇧🇩 Bangladesh9.1%
🇬🇧 United Kingdom9.0%

While the above countries fight to sustain their purchasing power, some parts of the world are expected to continue faring exceptionally well against the backdrop of a widespread cost-of-living crisis. Many Asian countries, notably Japan, Taiwan, and China, are all predicted to see inflation lower than 3% in the upcoming year.

When it comes to low inflation, Japan in particular stands out. With strict price controls, negative interest rates, and an aging population, the country is expected to see an inflation rate of just 1.4% in 2023.

Inflation Drivers

While rising food and energy prices accounted for much of the inflation we saw in 2022, the IMF’s World Economic Outlook highlights that core inflation, which excludes food, energy, transport and housing prices, is now also a major driving factor in high inflation rates around the world.

Drivers of Inflation
What makes up core inflation exactly? In this case, it would include things like supply chain cost pressures and the effects of high energy prices slowly trickling down into numerous industries and trends in the labor market, such as the availability of jobs and rising wages. As these macroeconomic factors play out throughout 2023, each can have an effect on inflation.

The Russia-Ukraine conflict and the lingering effects of the COVID-19 pandemic are also still at play in this year’s inflation forecasts. While the latter mainly played out in China in 2022, the possible resurgence of new variants continues to threaten economic recovery worldwide, and the war persists in leaving a mark internationally.

The confluence of macroeconomic factors currently at play is unlike what we’ve seen in a long time. Though the expertise of forecasters can give us a general understanding, how they will actually play out is for us to wait and see.

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