Emerging Markets in the Crosshairs: The Economic Toll of Rising Cyber Threats

This article delves into the findings of the World Bank report "Cybersecurity Economics for Emerging Markets", which analyzes the economic and social impact of rising cyber threats in developing countries. The report highlights how rapid digitalization, coupled with inadequate cybersecurity measures, has left emerging markets vulnerable to a surge in cyber incidents. Costa Rica's 2022 ransomware attack, which cost the nation 2.4% of its annual GDP, is a stark reminder of the potential economic toll. The article emphasizes the need for urgent investment in resilient digital infrastructure and international collaboration to address these growing threats.

Rapid digitalization in developing countries is transforming economies, driving growth, and improving public services. However, this digital leap also exposes these nations to growing cybersecurity threats. A recent report by the World Bank, "Cybersecurity Economics for Emerging Markets," reveals that emerging markets are becoming prime targets for cyberattacks, posing significant risks to their economic stability and development.

The report offers an in-depth analysis of over 30,000 publicly disclosed cyber incidents from 2014 to 2023, and it highlights a staggering trend: the number of cyber incidents worldwide is increasing by 21% annually. This growth is driven primarily by heightened digital adoption and a lack of adequate cybersecurity defenses in many developing regions. The impacts are not only disruptive but also economically devastating, with certain incidents wiping out sizable portions of a country’s GDP in a matter of days.

An Unchecked Digital Threat

The rise of cyber incidents in developing countries is closely linked to the rapid digitalization occurring in these regions. As internet access expands, so does the attack surface for cybercriminals. Latin America, for instance, is witnessing a 25% annual growth in cyber incidents — the highest rate globally. Meanwhile, upper-middle-income countries are experiencing a 37% spike in cyber events, making them the most vulnerable group.

The COVID-19 pandemic further fueled this trend. As remote work, e-commerce, and digital government services expanded to accommodate social distancing needs, so did the opportunity for cyberattacks. Between 2019 and 2020 alone, disclosed cyber incidents surged by 62%, impacting healthcare, public services, and educational institutions. The pandemic exposed critical vulnerabilities in digital infrastructure, which were later exploited during geopolitical events like the Russia-Ukraine war. In fact, from 2021 to 2022, the number of cyber incidents in Europe and Central Asia nearly doubled, underscoring how quickly these threats can evolve during times of crisis.

Economic Consequences: When Cybersecurity Fails

For developing countries, the economic impact of cyber incidents can be particularly severe. A prime example is Costa Rica’s 2022 ransomware attack, which paralyzed 20 government agencies and cost the economy an estimated 2.4% of its annual GDP. Such economic losses are not isolated events. According to the report, if developing countries could reduce major cyber incidents from the top to the bottom quartile over a decade, their GDP per capita could increase by approximately 1.5%.

The report also highlights that cyberattacks in developing countries are more likely to be politically motivated compared to financially motivated attacks in high-income countries. This shift in motive means that not only are economies at risk, but also political stability and public trust in government institutions.

Sectors like finance, public administration, and healthcare are particularly attractive to attackers. Financially motivated cybercrime continues to dominate in high-income countries, where attackers target sensitive financial information for profit. Conversely, in lower-income countries, cyberattacks often serve as political tools, disrupting government services and spreading fear and misinformation.

Addressing the Cybersecurity Gap

Despite the pressing need, many developing countries lack the resources and expertise to build resilient digital systems. The World Bank’s report outlines several recommendations for emerging markets to bridge this cybersecurity gap. One crucial step is to strengthen national cybersecurity capacities through better data collection and reporting. Standardized definitions and transparency in disclosing cyber incidents would help governments and organizations assess the real scale of the problem and develop tailored strategies.

Furthermore, the report urges a shift from reactive to preventive approaches, with a focus on resilience in critical sectors such as finance and healthcare. Governments should also consider fostering a competitive local cybersecurity market, which can attract investment and innovation. Promoting public-private partnerships will be key in mobilizing resources and expertise.

Developing nations should prioritize investments in digital infrastructure that can withstand evolving threats. The Costa Rica incident, for example, illustrated how a single ransomware attack can cripple critical systems for months. The report recommends that governments focus on designing secure digital frameworks, particularly for public administration and utilities, where cyberattacks have the potential to cause widespread disruption.

A Call for Global Collaboration

The World Bank report concludes by emphasizing that cybersecurity is not just a national issue — it’s a global one. Addressing this challenge will require international cooperation and knowledge sharing. As digitalization continues to expand, emerging markets cannot afford to lag in cybersecurity. The costs are simply too high, both economically and socially. Without immediate action, these nations risk losing the very economic gains that digital technology promised to deliver.

The stakes are clear: to unlock the full potential of digital economies, emerging markets must invest in cybersecurity now. Only then can they safeguard their development trajectories against the growing tide of cyber threats.