How Would Elections in 2024 Reshape the Global Economy?
- In 2024, it will be an election year, with over 40 countries holding elections.
- These elections would have a significant impact on the global economy.
Countries contributing over 60% of the world’s economic output and home to more than 50% of the population will be having elections that will impact the global economy in 2024. Major countries like the United States, India, Taiwan, Russia, Mexico, Brazil, etc, are among the 50 countries on the verge of power shift in 2024. This will seriously influence the global economy. Elections in 2024
These elections could alter the path of an already ailing global economy. We have somehow recovered from the aftermath of the COVID-19 pandemic and fought looming recession threats and geopolitical unrest. The global economy is bracing for a slowdown, if not a recession, in 2024. Moreover, these elections will have short- and long-term effects on the worldwide economy.
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Major Elections in 2024 Elections in 2024
2024 can also be called an election year, as major countries will have elections this year. The results of these elections could significantly impact the global economy, ranging from policy shifts, market volatility, geopolitical risks, etc. Critical areas like trade, finance, energy, technology, healthcare, etc., would significantly change.
In May 2024, India, the world’s largest democracy & world’s fifth-largest economy, will be having elections. Narendra Modi-led NDA will face competition from Congress, AAP, and other parties. The results are expected to impact both the Indian and global economies. Plus, experts believe that the Indian economy would be one of the fastest-growing economies in the world.
In November 2024, the United States will also have an election between the Republicans and Democrats. The outcome of these elections could significantly impact the world economy. A Republican victory might lead to tax cuts, reduced regulations, and ease trade tensions. A Democratic win could prioritise social spending, climate action, and regulations.
Other nations having elections in 2024 are France in April, South Korea in March, Indonesia in February, Mexico in June, Brazil in October 2024, Nigeria in February-March, etc. When so many countries are having elections, their governments will change, policies might suffer, economies will be volatile for a while, and other related scenarios will affect the nation’s economy and the world economy.
How would these elections impact the Global Economy? Elections in 2024
Elections in 2024 have the potential to impact the global economy significantly, more so if they are taking place in major economies. Significant implications include policy shifts that lead to market volatility and address geopolitical risks while impacting critical areas like trade, energy, finance, technology, healthcare, etc.
Policy Shifts: A Make or Break Decision
Whenever a new government comes to power, or an older government regains control, the first impact is on the policies. These policies include economic policy, trade policy, regulatory policy, & geopolitical policy. Each of these policies impacts the global economy in more ways than one.
Economic policies revolve around changes in fiscal spending, taxation, and regulations directly affecting economic growth, inflation and investments. Trade policies would revolve around shifts in trade agreements, tariffs, and business regulations that would significantly impact the global trade flow and, eventually, the costs of products and services.
Changes in the regulations related to business, environment, and labour can affect these nations’ investment patterns and economic activities. Robust and comprehensive rules would be beneficial, but it’s a double-edged sword. Deregulations could attract investors but harm consumer safety, while stricter regulations could promote safety or environmental protection but could discourage investments.
The outcome of these elections is likely to impact the geopolitical policies significantly. It would influence international relations and regional stability, heavily impacting energy markets, the flow of valuable resources, etc. Even a slight change in foreign policy could affect energy supply chains and security, potentially impacting resource prices and economic growth.
Elections and Market Volatility Goes Hand-in-Hand Elections in 2024
Right from the moment elections are announced, the market becomes volatile. During the pre-election period, debates, campaigns, and election manifesto potentially fuel market volatility. There’s a dilemma of which party will win and what policies they will implement. Investors delay their decisions; market flow is reduced, thereby increasing market volatility.
The post-election period is equally exciting; unexpected election outcomes might surprise investors and trigger volatility. The policy details and implementation timelines still need clarification, even if the results align with expectations. This further fuels the uncertainty and market volatility.
Investors closely monitor the election results because they know how these outcomes might impact their investments. Different sectors react differently to potential policy changes. For instance, healthcare stocks could gain if the government increases healthcare spending. Energy stock could fall amid stricter environmental regulations.
Geopolitical Risks & Global Election
The elections in 2024 can significantly impact the global geopolitical scenario. Moreover, the impacts are complex and multifaceted. Elections in significant powers like the United States, China, India, & Russia etc could significantly alter global power dynamics and geopolitical stability. Leadership changes and foreign policy could increase tensions across borders, military actions and diplomatic scenarios that can significantly impact the global economy.
Sometimes, during geopolitical conflicts, oil and gas supplies get disrupted, leading to economic instability. If the results of elections in the affected areas are positive, this problem can be solved. Moreover, a stable and robust government could address trade disruptions caused by restrictions, sanctions, and blockades.
Increased geopolitical tensions directly affect the investors’ confidence and reduce foreign direct investment, affecting economic growth. Even in smaller countries, election results could have regional repercussions, especially if they are strategically important in trade routes. Broadly, it can be said that geopolitical risks can be addressed with positive results in elections.
Election results lead to significant shifts in foreign policies, impacting alliances, partnerships and regional engagements. Sometimes, these scenarios could solve geopolitical issues, create new tensions, or fuel existing ones. For instance, the U.S. Presidential and Indian general elections can solve related geopolitical risks.
Short-Term & Long-Term Implications on the Global Economy
However, it’s too early to predict the outcomes of these elections and how they will impact the global economy; there would be some short and long-term implications. But by looking at data from previous years, potential changes in policy changes, regional dynamics, and historical trends, experts can predict certain implications for the global economy.
The Short-Term Implications of Elections
The period before and immediately after the elections would witness significant market volatility. Reasons for this volatility could be many, but one of the major ones would be uncertainty about the outcome and potential policy shifts. Investors strategically adopt a “wait-and-watch” approach, significantly influencing flows and economic activity.
The election period would also witness trade disruptions, and its extent would depend on the specificity of policies implemented, changes in trade agreements, etc, during power shifts. Based on previous electoral outcomes and anticipated policy changes, investors can also target the investments anticipating growth in specific sectors and regions.
The Long-Term Implications of Elections
Whenever a government is elected after an election, it implements certain policies with the potential for long-term implications. Multiple growth factors can be streamlined based on factors like fiscal spending, taxation and regulations. Some governments could bring policies favouring investment and innovation, which could bring growth, while some could adopt defensive strategies affecting economic growth.
Maybe not in 2024, but in 2025 or 2026, the long-term implications of these elections would be visible. A Republican win in the United States could lead to tax cuts, and deregulation could initially boost market sentiments but cause long-term fiscal concerns. At the same time, the democratic win would increase social spending, and regulations could impact investments in specific sectors.
If the Narendra Modi-led NDA wins, the leadership continuity might offer investors short-term stability. At the same time, the long-term implications would be surrounded by inequality and protectionist trade policies. The various 2024 elections will significantly impact the global economy in the short and long term.
2024 is also known as the election year because the countries having elections contribute over 60% of their economic output and are home to more than half of the global population. How would the world be after these elections? How would the economic scenario be by the end of 2024? It will be answered soon. Stay tuned.