INTERNATIONAL PERSPECTIVES 2024

Every year, we assess the international perspectives for the next twelve months. Knowing the short-term global outlook is essential for several reasons: Small or large companies rely heavily on the economic environment to make strategic decisions. Individual and institutional investors base much of their investment decisions on how financial markets and the economy are expected to perform. Government policymakers, such as fiscal officials and central banks, also use the short-term economic perspective to make decisions about financial factors that significantly impact the lives of individuals and businesses, such as monetary or fiscal policy. In this article, we’ll explore some of the main trends and scenarios for 2024.

Global elections:

In 2024, there will be more than 65 elections in countries home to more than four billion people, meaning that more than 40% of the world’s population will elect new rulers. This election season will begin in Taiwan in January and culminate in the United States in November. While there will be more voting than ever, that does not mean more democracy than ever: many elections will not be fair and free.

By November 5, 2024, American citizens will have cast their votes to elect a president, all 435 House representatives, 34 of 100 senators, and 11 state governors. Between now and then, there will be an avalanche of critical events. On January 15, the caucuses and primaries will begin to help select presidential candidates, and by March 12, the final nominees of each party must be defined.

Voters and courts will give their verdict on Donald Trump, who, as of December 2023, had approximately a 30% chance of regaining the presidency. The final result could depend on a few thousand voters in swing states. But the consequences will be global, affecting everything from climate policy to military support for Ukraine. Right now, there will likely be another confrontation between Biden and Trump, at least according to most political experts. The good news for Biden is that history is usually on the side of sitting presidents regarding re-election processes. Since 1912, sitting presidents have won about three out of every four elections, except when there has been a recession in the previous two years. The 2020 election did fit that profile perfectly.

Vladimir Putin has decided to run in Russia’s March presidential election, which will keep him in power until at least 2030. The Kremlin chief feels he must guide Russia through a perilous period. After defusing an armed mutiny by mercenary group leader Wagner in June, Putin has taken steps to shore up support among his core base, in security forces, the army, and among regional voters outside Moscow. He has no plans to stop being Russia’s leader.

Economic Performance:

If we are looking for a one-word summary of what awaits the global economy next year, it might as well be “volatility.” The global economy will weaken in 2024, according to 61% of chief economists surveyed for a recent World Economic Forum report (“Chief Economists Perspective”). The following data comes from that report.

We start with an important fact: The outlook for the US economy has improved notably since the last survey. Around 80% of respondents expect solid or moderate growth this year and next, up from about 50% in May 2023.

Asia is considered to have the most robust growth perspectives, particularly in South Asia, where 92% expect moderate or strong growth this year. However, expectations around China have plummeted. Only 54% expect average or strong growth to close in 2023, compared to 97% in May. And there are few expectations of that changing in 2024.

Europe faces weak or very weak growth this year, according to 77% of those surveyed. But the perspective could change markedly in 2024, with only 41% expecting weak growth by then. For the Middle East and North Africa, 79% expect moderate or strong growth in 2023 and 2024, up 15 percentage points from May. Optimism arises from the inflation perspective: 86% of chief economists believe the worst of the global inflationary surge is now over. Expectations around monetary policy are consistent with this: 93% of respondents expect the pace of interest rate increases to slow in inflation-prone economies.

Inflation expectations in the United States have improved: 54% of economists surveyed expect moderate or low inflation, up from 32% in May. But Europe is still seen as heading towards high or very high inflation this year, according to 70% of those surveyed. China faces a different problem, with signs of deflationary pressures reflected in the results: 81% of economists anticipate low inflation this year, up from 48% in May.

On the other hand, Goldman Sachs expects the global economy to outperform expectations in 2024, boosted by confidence that the worst interest rate hikes are behind us. The investment bank forecasts the global economy will expand 2.6% next year, above the 2.1% consensus forecast of economists surveyed by Bloomberg. The United States is expected to outperform other developed markets again, with an estimated 2.1% growth.

Global manufacturing activity is also expected to recover from the recent decline. The world’s large factories have been affected by a weaker-than-expected rebound in Chinese manufacturing, the European energy crisis, disruption in supply chains, and an inventory cycle that had to be corrected due to excess of offer. Global production has been in decline for most of the year. The S&P indicator of global manufacturing activity reached 49.1 in September. As we know, a reading below 50 indicates a contraction in activity. China’s Caixin/S&P Global Manufacturing PMI also fell to 49.5 in October from 50.6 in September, marking the first contraction since July.

G20 Members PIB (2022 – 2024)

Country	2022 (1)	2023 (2)	2024 (2)
Argentina	5.0%	-2.5%	2.8%
Australia	3.7%	1.8%	1.2%
Brazil	2.9%	3.1%	1.5%
Canada	3.4%	1.3%	1.6%
China	3.0%	5.0%	4.2%
France	2.5%	1.0%	1.3%
Germany	1.8%	-0.5%	0.9%
India	7.2%	6.3%	6.3%
Indonesia	5.3%	5.0%	5.0%
Italy	3.7%	0.7%	0.7%
Japan	1.0%	2.0%	1.0%
Mexico	3.9%	3.2%	2.1%
Russia	-2.1%	2.2%	1.1%
Saudi Arabia	8.7%	0.8%	4.0%
South Africa	1.9%	0.9%	1.8%
South Korea	2.6%	1.4%	2.2%
Turkey	5.5%	4.0%	3.0%
United Kingdom	4.1%	0.5%	0.6%
United States	2.1%	2.1%	1.5%
European Union	3.6%	0.7%	1.5%
(1) – Real
(2) – Estimated
Source: FMI

Sustainability and Climate Action:

In 2024, greater attention will be paid to sustainability and climate action. Governments, businesses, and individuals will intensify their efforts to reduce carbon emissions, adopt renewable energy sources, and implement sustainable practices. Circular economies, green products, and sustainable agriculture will gain momentum as the world collectively addresses the climate crisis. The Olympic games in Paris in the summer of 2024 will be an excellent opportunity to demonstrate that it is possible to hold global sporting events sustainably. The global accounting profession will be busy implementing the first international sustainability standards.

Evolution of Remote Work:

Remote work became necessary during the pandemic and will evolve into a more permanent and flexible model. Many companies will continue to offer remote work options, fostering a global talent pool and driving changes in real estate markets as people can now move to areas that provide a better quality of life. Employers and employees will reach more agreements on hybrid work schedules. We will see conversions of office spaces, which will seek alternative uses.

Acceleration of Digital Transformation:

Digital transformation has been a constant trend but is expected to accelerate further in 2024. The COVID-19 pandemic dramatically accelerated the adoption of digital technologies across industries, and companies are now focusing on optimizing and expanding their digital capabilities. Cloud computing, artificial intelligence (AI), and the Internet of Things (IoT) will continue to play central roles in this transformation. More SMEs will have access to digital tools faster and cheaper.

AI and Automation Integration:

Artificial intelligence (AI), particularly generative AI, will be omnipresent in the workplace. From autonomous vehicles to advanced chatbots and automated customer service, AI will continue to improve efficiency and convenience across industries. However, debates about ethics, job displacement, and the impact of AI on society will also become more prominent. Microsoft will present CoPilot, and with this, the process of massifying AI into technological solutions available to everyone will begin.

Cybersecurity:

As our dependence on digital technologies grows, so does the importance of cybersecurity. In 2024, we can expect increased investments in cybersecurity to protect sensitive data and critical infrastructure. Cyberattacks will become more sophisticated, leading to a constant battle between security experts and cybercriminals. The digital war between China, Russia, and the US is a fact and will intensify over time.

Space Exploration and Technology:

2024 will mark essential milestones in these fields. Private companies like SpaceX and Blue Origin will continue to push the boundaries of human spaceflight with missions to the Moon and Mars. These efforts will inspire a new generation of space enthusiasts and open opportunities for commercial space companies. And other countries like China or India will continue to have important victories.

Black Swans

Finally, some possible black swans toward 2024:

▪ The United States and China escalate their tensions and move from diplomatic conflict to isolated military events, mainly in Southeast Asia, derived from political or economic events in Hong Kong, Taiwan, or the China Sea, with subsequent disruption in supply chains.

▪ Use of nuclear weapons with tactical objectives in the Ukraine-Russia conflict or the Hamas-Israel conflict, mainly by a terrorist group.

▪ Large cyber-attacks cause massive disruption to information flows, financial services, or access to energy sources.

▪ Financial crisis in the commercial real estate sector, caused mainly by office spaces that have not been able to recover the cash flows initially planned due to workers who, in the post-pandemic world, never returned full-time to their offices.

▪ Joe Biden loses the presidential election to Donald Trump, mainly due to his handling of the military conflicts in Ukraine and Palestine.

Conclusion:

As we look ahead to 2024, the world will experience significant changes. The trends described in this article reflect constantly evolving challenges and opportunities. As business leaders, we must help our organizations be prepared for different possible scenarios, carry out effective and conscious strategic planning, and manage the risks of our external environment in the best possible way.