Global elections 2024: navigating geopolitical turbulence and economic implications

2024: a pivotal year for geopolitical shifts and investor vigilance

In 2024, nations that significantly contribute to global GDP are set for critical elections. Bloomberg Economics projects that voters in about 40 countries, accounting for 41% of the world’s population and 42% of the global GDP, will elect new leaders, reshaping geopolitical landscapes. These elections signal a year where investor vigilance is crucial due to the complex network of interconnected events.

The year starts with Taiwan’s presidential elections in January and concludes with the U.S. elections in November, marking 40 national elections. Despite the easing tensions in U.S.-China relations, the elections occur amidst increasing bloc rivalry, fueled by the competition between China and Western countries, Russia's ongoing war in Ukraine, the war between Israel and Hamas, and the assertive stances of non-aligned nations. The results of these elections will reflect and potentially influence the delicate balance of geopolitical and economic environments. Given the potential for significant disruptions in 2024, investors are advised to exercise caution and not rely on autopilot investment strategies.

Below are eight key elections to watch over the next 12 months, providing insights into the current dynamics of these races and their potential impact on investment markets as the voting approaches.

 

The outcome of Taiwan’s elections will resonate from Beijing to Washington

The 2024 Taiwanese elections have evolved into a three-way race following the dissolution of the alliance between two opposition parties, the Kuomintang (KMT) and the Taiwan People’s Party (TPP). This development appears to strengthen the position of the incumbent Democratic Progressive Party (DPP). Notably, Terry Gou, the billionaire founder of Foxconn, a major Apple supplier, unexpectedly withdrew from the presidential race shortly before the nomination deadline. Consequently, Taiwan’s ruling DPP is now pitted against the TPP and KMT in the January 13 elections.

The DPP's presidential nominee is Lai Ching-te, who has been serving as Taiwan’s Vice President since 2020. He aims to succeed President Tsai Ing-wen, who cannot seek re-election due to term limits.

The KMT's candidate, Hou Yu-ih, has encountered challenges in recent months, with the TPP drawing some of the KMT's traditional voter base. Meanwhile, a third-party candidate, Ko Wen-je, holds the potential to be a decisive figure as discontented young voters seek alternatives to established parties. The DPP could benefit from Ko's independent candidacy, likely drawing more votes from the KMT than the incumbent party. While the KMT advocates for increased trade and cooperation for a peaceful relationship, this stance has been compromised by Beijing's growing assertiveness. In contrast, the DPP focuses on defending democracy and fostering ties with the U.S. to deter a potential Chinese invasion. Beijing perceives the DPP as separatists due to the party’s foundational goal of establishing Taiwan as a “sovereign, independent, and autonomous nation,” conflicting with Beijing’s claims over the island.

Despite the volatility of polls and potential untrustworthiness given the tripartite nature of the race, external factors such as Chinese and U.S. policies could significantly sway voters.

The outcome of Taiwan’s early-year vote holds the power to shape the tone of cross-strait and U.S.-China relations in the following year, with tensions likely escalating further if the current Vice President Lai secures victory as forecasted.

 

Prabowo and the Indonesian presidency

In February, Indonesia heads to the polls, with Defense Minister Prabowo Subianto (Gerindra), a Suharto-era lieutenant general once denied a U.S. visa for alleged human rights abuses, leading the electoral race. Various surveys indicate his popularity surpassing that of the two main contenders, Governor of Central Java Ganjar Pranowo (Indonesian Democratic Party for Struggle), and former governor of Jakarta Anies Baswedan (National Awakening Party). Ganjar stands to gain from the endorsement of outgoing President Joko Widodo, who departs with impressive domestic approval ratings (82%) and the nation on a consistently ascending economic trajectory. Indonesia boasts one of the lowest inflation rates globally, the most robust currency in Asia, and ongoing improvements in infrastructure.

The nation's relationships with major global powers are presently well-balanced and are expected to maintain this equilibrium even with a new leader at the helm. While Widodo's influence in Indonesian politics will persist post his departure, it remains to be seen whether his successor will pursue more protectionist measures on Indonesia’s rich resources.

 

Putin gazing towards another six-year term

President Vladimir Putin, at the helm of Russia for the past 23 years, orchestrated a constitutional amendment in 2020 allowing him to theoretically extend his rule until 2036—potentially surpassing the tenure of Joseph Stalin. Despite not yet announcing his candidacy, the impact of sanctions and Russia's overall economic performance on the daily lives of ordinary citizens is poised to be a pivotal electoral issue.

While Putin's recent approval ratings (approximately 70%) suggest widespread popularity, particularly among the affluent elite and those over 55 who rely on state media for their news, the imprisonment of one of his potential major opponents, Alexei Navalny, diminishes the likelihood of any formidable challenge. If Putin opts to run, securing another six years in the March election appears almost inevitable.

Despite these domestic dynamics, China and Russia currently experience their most favorable relations since the late 1950s. Although lacking a formal alliance, the two nations maintain an informal agreement to synchronize diplomatic and economic strategies, fostering a burgeoning alliance against the United States.

 

Modi’s strategic political maneuver

In April-May, nearly 1.4 billion Indians will participate in the polls, marking a significant electoral event for the world's most populous nation. Prime Minister Narendra Modi and his nationalist Bharatiya Janata Party (BJP) are fervently seeking a third term in office.

Over the past decade, Modi has maintained enduring popularity among Indians, credited with instilling political stability, implementing tech-enabled government services, fostering infrastructure investments, and championing welfare reforms and national security. Despite facing criticism for a crackdown on civil liberties during his tenure, Modi enters the election as the clear favorite, with supporters acknowledging his role in elevating India's global standing. India's successful unmanned lunar landing in August, following Russia, the US, and China, further contributes to Modi's appeal. The continuity of the current BJP-led regime, securing a near-majority seat share, is anticipated as the optimal outcome by Indian markets. This scenario is likely to propel investments in themes related to infrastructure, new energy, and the Make in India initiative.

However, Modi's political success has been contingent on substantial support from India's Hindu majority, with critics contending that it involves stoking tensions with the country's sizable Muslim minority, constituting about 14% of the population.

A surprise electoral setback for Modi, who has held office since 2014, could unsettle investors in a nation that the US and its allies envision as a counterweight to China's economic and military influence. While there is a perceived lack of investor confidence in Chinese growth, any unexpected developments could redirect foreign flows away from the relatively more expensive Indian market in 2024.

 

Coalition governments in South Africa

In a historic shift since the end of apartheid in the early 1990s, South Africa's ruling African National Congress (ANC) confronts the unprecedented risk of falling short in securing adequate votes for independent governance. President Cyril Ramaphosa contends with formidable challenges, including a stagnant economy, record unemployment, crumbling infrastructure, and escalating crime, all contributing to waning support for the ANC. The nation grapples with a debilitating energy security crisis, marked by severe shortages leading to controlled blackouts. These circumstances intensify the challenges of rising living costs and contribute to a deteriorating business environment.

The situation may further escalate as vital state-owned entities such as the power utility firm Eskom and freight logistics company Transnet experience financial declines. Additionally, the Post Office and South African Airways face the prospect of liquidation. This growing predicament raises the possibility of the ANC relinquishing its overall majority, compelling it to form a coalition government with other parties—an unprecedented reality looming on the political horizon.

 

Mexico's 2024 election poised for history with potential female president

The upcoming 2024 election in Mexico is poised to make history as the largest in the nation's annals. The magnitude of this event is not merely a result of the sheer number of voters; for the first time, all 32 states of the country will concurrently conduct elections for local seats alongside the presidential contest. The electorate will cast their votes for over 20,000 positions nationwide.

Former Mexico City mayor Claudia Sheinbaum is vying for the presidency on behalf of the ruling Morena party, led by the incumbent President Andres Manuel López Obrador. Currently, Morena and its allies dominate the majority of seats in 21 local legislatures, providing the ruling party with a significant advantage. Initial polls indicate Sheinbaum holds a substantial lead. In the electoral race, she will encounter Senator Xóchitl Gálvez, the pre-candidate for Frente Amplio por México (FAM), the primary opposition alliance comprising the National Action Party (PAN), the Institutional Revolutionary Party (PRI), and the Party of the Democratic Revolution (PRD).

Should Sheinbaum secure victory, she is likely to remain closely aligned with the Morena coalition, relying heavily on López Obrador's support to advance her policy agenda. The election unfolds as a pivotal moment that could potentially usher in Mexico's first woman president.

 

The European Union test for populists

June will witness the world's largest transnational election, involving over 400 million eligible voters across 27 European Union countries, selecting 720 members for the European Parliament. These representatives play a pivotal role in decisions spanning diverse issues, from mobile phone roaming charges to the privacy of online data.

Debates on climate, immigration, and economic policy will take center stage. Regarding climate policies, discussions may revolve around whether the ambitious green deal plan to decarbonize EU production systems should be slowed down (Conservatives), accelerated (Social Democrats and Greens), or maintained at its current pace (Centrists). The upcoming legislature concludes a year before the symbolic 2030 climate milestone. Policies addressing the EU's immigration and asylum regimes will also be prominently featured.

The ongoing conflict in Ukraine and the future relations with Russia will undeniably influence voters' perspectives, albeit with regional variations. Additionally, the themes and personalities shaping the U.S. presidential campaign in full swing by June 2024 may impact and shape discussions in Europe.

This election serves as a litmus test for the support of right-wing populists, buoyed by recent victories such as Greet Wilders' anti-Islam, anti-EU PVV Freedom Party in Dutch elections and Giorgia Meloni's far-right Brothers of Italy triumph. The broader focus will be on assessing the new balance of power between left and right, its implications for key long-term strategies developed in the current legislature (e.g., the Green Deal, EU strategic autonomy), and the relative gains or losses experienced by integrationists or nationalists.

 

Trump-Biden rematch

November 5 will witness tens of millions of Americans deciding the fate of the 60th President of the United States, potentially extending incumbent Joe Biden's term until the age of 86. Despite recurring gaffes and perceptions of aging, as evidenced by numerous polls, a majority of voters express concerns about Biden's fitness for the role, paralleling similar concerns about his likely rival, former President Donald Trump, who is 77 years old. Republicans are expected to emphasize Vice President Kamala Harris as a focal point to highlight Biden's age as a central campaign issue, with Harris currently holding a mere 33% favorability rating in a recent Wall Street Journal poll. Trump, despite facing multiple criminal trials, remains a standout favorite in the Republican party nomination contest.

Over the past two years, a substantial majority of voters, particularly Independents, believe that the country is headed in the wrong direction, despite positive economic indicators such as a robust labor market, rising wages, easing inflation, and increased consumer confidence. Notably, 58% of respondents in the Wall Street Journal poll express the view that the economy has worsened in the past two years, and nearly three-fourths believe inflation is on an unfavorable trajectory.

However, in the last six months, both Biden and Trump have not only maintained but strengthened their dominant positions within their respective party nominations. This trend suggests the likelihood of the United States entering its third consecutive close presidential election, posing a more challenging political environment for Corporate America until at least the end of the next year.

Notably, the China policies of both Trump and Biden are expected to remain consistent regardless of the election outcome. Trump's support for Taiwan and tariffs on Chinese imports has been continued by Biden, who has additionally championed the CHIPS and Science Act, a bipartisan law aimed at supporting the U.S. semiconductor industry and restricting China's chip development. Corporate America is poised to face an increasingly precarious political environment throughout the coming year.

 

2024: a dance of democracies shaping the world's geopolitical tapestry

As the world anticipates pivotal elections in 2024, the balance of geopolitical dynamics and economic landscapes is at stake. From Taiwan to the United States, decisions made in various nations will reverberate globally, influencing trade, alliances, and market trends. Investors should remain vigilant and adaptable, recognizing the interconnectedness of these events and the imperative need for strategic foresight in navigating this turbulent year.