Programming AI for Business Analytics: Geopolitical-Economic Analysis of Australia, EU, US, and BRICS Nations

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Programming AI for Business Analytics

AI Causal Models and Large Language Model Forecasting Project

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Executive Summary

The following report is a comprehensive geopolitical-economic analysis of Australia, the EU, the US, and BRICS nations. The study will reveal that all these economies have considerable inflationary pressure from the disrupted global supply chains, volatile energy prices, and persistently different domestic policies. Projections indicate continued inflationary trends in each economy, those specific to each firmly driven by unique geopolitical tensions and trade relationships.

Some of the key recommendations to rid it of inflation include increasing domestic production, diversification of trade partnerships with BRICS, and possibly the adaptation of digital currencies to further facilitate international trade. Additionally, policymakers will have to pursue short-term economic recovery while balancing it with long-term sustainability. The following report gives actionable insight into each region from a close critical analysis of the challenges and opportunities facing Australia, the EU, the US, and BRICS. The following sections will elaborate on those dynamics and provide a road map of how that future economic stability can be attained.

List of Figures

Introduction to Geopolitical Economics

Major countries like Australia, the EU, the US, and BRICS are interdependent in setting the geopolitical-economic landscape. Australia is highly dependent on natural resources and exports, so constraints in supply chains and increased global commodity prices raise the prospect of inflationary pressure (Babi?, Dixon & Liu 2022, p.3). These other challenges are further compounded by external geopolitical events influencing dynamics in international trade.

In the EU, energy dependence inflated especially as regional political unrest shook key supply chains-eyeing economic stability gaps among the member states. The US, too, has its own set of inflation pressures- the product of both domestic policy and shifting global economic dynamics- and these tensions weigh on the US's efforts to contain the upward spiral in living costs.

In this respect, BRICS nations, especially China and India, are not insulated from the economic factors that bring into play a different set of politically-driven inflationary prevalent trends. While economic growth has been recorded in these countries, the risks remain paramount, such as trade policies, political stability, and regional conflicts. In this respect, the section then shows how the specific economic and geopolitical environment of each region adds to its inflationary pressures, while the data from the DGEA dataset visualizes how the events of a geopolitical nature further correlate with inflationary trends in commodity price trends.

Methodology

The report leverages AI-driven processes in assessing geopolitical-economic conditions affecting inflation and the utilization of LLM and Causal AI. LLMs bring out knowledge from a sea of textual information (Shafqat & Na 2024, p.1), while Causal AI establishes interrelations between strategic variables such as commodity price and geopolitical stability on monetary policy. Integrating historical and real-time data, these models provide effective and actionable insights into future outbreaks of inflation.

Figure 1 Forecasting of inflation

The result of the above is that, with this novel approach, the report does not only analyze the current economic state but also makes a forecast for the future, too, which is of great value for policy-makers and stakeholders alike.

Results Section

The analysis identifies the important inflation drivers within the selected economies. In Australia, the sudden shifts in energy and agricultural commodity prices have been important for inflation. It relies heavily on exports and international trade, making it highly vulnerable to any fluctuations in world markets. In the EU, among the key drivers of inflation, a big contribution is made by its dependence on energy and breakdowns in supply lines because of geopolitical tensions. Allegations of this sort create unstable energy prices that echo inflationary trends within the union.

Figure 2 Casual factor

Similarly, these domestic economic policies of the US have failed to keep pace with the shifting global market dynamics, adding to inflationary pressures. AI-based projections indicated that inflation would reach the US over the following six months (Kallio 2024, p. 44). These results would note the interconnected nature of the global economy and how regional stability must be taken into consideration when trying to control inflation. The AI models' visual forecasts reveal the continuous pressures each region is under and let the viewer understand what future economic scenarios might look and feel like.

Figure 3 Statics Variable importance

Insights and Recommendations

Based on the analysis, a few inferences are drawn thereupon. The immediate task before Australia is related to inflation due to rising commodity prices and external trade dependence. All in all, strengthening trade cooperation with the BRICS countries and diversifying economic partners can help decrease Australia's dependence upon adverse global market conditions.

Figure 4 Feature importance

Figure 5 Inflation rate prediction

Figure 6 what-if analysis

This puts the EU under inflationary pressure since the reliance is principally on external energy sources. In supporting such need to invest in sustainable energy alternatives and form strategic partnerships outside the EU as a way of getting a more stable source of energy whose prices can be controlled, hence stabilizing the prices, and reducing the rate of inflation in the long term (Krebs, 2024, p.3). More importantly, addressing economic disparities that are within the union requires coordinated monetary and fiscal policies as a way of ensuring stability in the long term.

Figure 7 Trend seasonality for the forecasting model

Figure 8 Inflation forecasting

Figure 9 SHAP summary model

Perhaps it is time for the US to reconsider monetary policies to defeat the monster of inflation without bringing economic growth to a grinding halt. Targeted fiscal measures directed toward the protection of vulnerable sectors of the economy will help absorb the shocks of inflation while building long-term resilience. Indeed, the US must change its tune on economic policy if it is to march in tandem with the shifting dynamics of global markets.

In this light, adaptive strategies from geopolitical-economic levels do call for an approach that can focus on global collaboration, technological advancement, and innovative policy approaches. With such tools at their disposal, these countries will be better equipped to face up to the inflationary pressures while striving to elicit balanced economic growth. This report emphasizes regional approaches as the key to surmounting inflation and consolidating financial stability in the long term.

References

Babi?, M, Dixon, AD & Liu, IT 2022, ‘Geoeconomics in a Changing Global Order’, International political economy series, Springer International Publishing, pp. 1–27, viewed 26 September 2024, <https://link.springer.com/chapter/10.1007/978-3-031-01968-5_1>.

?Kallio, A 2024, ‘ECONOMIC POLICY UNCERTAINTY AND CONSUMER SENTIMENT: INSIGHTS FROM DIFFERENT AGE DEMOGRAPHICS’, Jyvaskyla University, pp. 1-61.viewed 26 September 2024, <https://jyx.jyu.fi/bitstream/handle/123456789/95974/1/URN%3ANBN%3Afi%3Ajyu-202406174740.pdf>.

?Krebs, T., 2024 ‘Can price controls be optimal? The economics of the energy shock in Germany’, Institute of Labor Economics, pp. 1-71, viewed 26 September 2024, <https://www.econstor.eu/bitstream/10419/300939/1/dp17043.pdf>.

Shafqat, W & Na, S-H 2024, ‘Evaluating Complex Entity Knowledge Propagation for Knowledge Editing in LLMs’, Applied Sciences, vol. 14, Multidisciplinary Digital Publishing Institute, no. 4, pp. 1–15, viewed 26 September 2024, <https://www.mdpi.com/2076-3417/14/4/1508>.

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