GDP'S GROWTH IS NOT ENOUGH: WHY THE WORLD NEEDS NEW GROWTH METRICS

Discussions suggest not. As highlighted by Daniel Susskind, Research Professor, King's College London, during the ‘Growth: A History and a Reckoning’ session on Tuesday, January 21: “What you choose to count, becomes what counts. GDP metrics are a narrow measure of the economic activity that happens in a market – but alongside it we should measure what else matters.”

Balancing economic growth with progress in sustainability could be the start of a new chapter for us all. And the timing of this mood shift could not be more significant, as our Deputy CEO and CFO, Yuvraj Narayan, raised during his ‘Investing in Infrastructure and Growth: Uplifting Communities and Economies’ panel on Wednesday, January 22: “With global GDP set to grow by 2.7% this year, it’s more important than ever to invest in scalability to build a foundation for shared prosperity.”

As this idea gains traction, here’s everything you need to know about why the change in GDP metrics is needed to help improve economic growth, and what it could look like if it takes off.

Why aren’t GDP metrics enough anymore?

GDP metrics focus solely on the monetary value of output, meaning the more a country produces, the higher its GDP. However, this measure fails to account for sustainability.

As Daniel Susskind raised during his talk, the pursuit of prosperity has come at an enormous price, including the destruction of the natural environment and the emergence of vast inequalities.

Equally, our Group Chairman and CEO, Sultan Ahmed bin Sulayem, noted in his ‘India’s Economic Blueprint’ panel on Thursday, January 23, that while India is predicted to become the world’s third-largest economy by 2027, it requires global collaboration and sustainable financial growth strategies to grow in a positively impactful way—one that delivers long-term value for its people, the environment, and the world.

So, to enable universal growth across all markets, we need strategies for economic growth and development that go beyond measuring impact. We need new indicators that also encourage growth in more accessible and inclusive ways to benefit the environment and all levels of society.

How can we utilise GDP growth metrics to make change?

1: Reimagine growth metrics

The idea of GDP 2.0 would consider environmental and social indicators as well as economic measures. This change is possible: initiatives like the EU’s Green Deal and the WEF’s The Future of Growth Initiative are already aligning economic goals with sustainability, innovation, inclusivity, and resilience to achieve balanced, and importantly, impactful, economic growth.

As H.E. Rania Al Mashat, Egypt’s Minister of Planning, Economic Development and International Cooperation explained in ‘The Future of Growth: Rethinking Prosperity for All’: “If we’re talking about reimagining growth, it’s no longer just the percentage of growth. It’s about sustainability. It’s about inclusivity. It’s about innovation. It’s about creating a resilient economy.”

2: Unlock sustainable finance

Funds like DP World’s Blue Bond and Green Sukuk, which incentivise sustainable infrastructure or renewable energy through accessible finance, show how we can encourage sustainable economic growth universally. Further, through such initiatives, investors can see the real-world results of sustainability projects, creating a long-term focus and confidence around investments for our people and our planet.

This is crucial for closing the $6.2 trillion annual climate finance gap, as highlighted by Al Gore, Chairman and Co-Founder of Generation Investment Management LLP, during the ‘New Trilemma: Climate, Development and the Middle-Class’ session on Thursday, January 23. He stated: “The entire continent of Africa has fewer solar panels than the single state of Florida in the United States. That is a disgrace upon the international system for the allocation of private capital, and it has to be addressed now.”

3: Create accountability

Several sessions at WEF highlighted the need for clear, measurable standards to hold businesses and governments accountable. When we make sustainability growth metrics part of policy, we must make it a driver of progress rather than an empty promise.

H.E. Badr Jafar, Special Envoy for Business and Philanthropy, UAE, and CEO of Crescent Enterprises, emphasised the importance of this during his ‘New Development Actors for the 21st Century’ panel on Tuesday, January 21. He said: “With the global impact-investing market exceeding $1.5 trillion, and untapped private wealth standing at $450 trillion, the resources required to drive transformative change are available. What is needed now is a framework that aligns these resources with measurable development goals.”

This missing link will ensure that the right kind of growth is funded. With both the future of GDP growth metrics and alternative GDP metrics, investments will be guided towards more sustainable and inclusive development.

How we measure success will set the course for building a greener, more prosperous future for all. Scaling this proposal is the next hurdle. But one thing is clear: the stakes are simply too high to shape tomorrow's world with yesterday's methods.