Introduction

In 2024, an extraordinarily high number of national elections will be held across the globe, including in some of the biggest economies: the United States, United Kingdom, India, Mexico, South Africa, Indonesia, Russia – and even the European Parliament. More than four billion people in at least 60 countries will head to the polls to choose who will lead them and shape economic and social policy. In many cases, these elections are being conducted for the first time since the COVID-19 pandemic and major new military conflicts – first with Russia’s full-scale invasion of Ukraine, and more recently the war between Hamas and Israel.

Populism will likely be a common feature to all these contests, with implications for businesses engaging with foreign partners. Populism has been one of the factors behind the shift seen in recent years away from the tenets of open trade, global integration, and a rules-based international order.

Another major factor is perceived national security prerogatives, such as the need to safeguard supply chains, diversify away from dependence on strategic rivals, and even restrict their competitors’ technological and economic advancement – a dynamic in US-China relations that transcends party divisions.

As such, regardless of the results of this year’s polls, tariffs, import / export controls, and other forms of protectionism are likely here to stay. However, the combined outcome of these elections may result in major policy shifts – including on sanctions, alliances, and energy trade.

Global Risks for Business

(i) Volatility in policymaking

The election of populist contenders could result in more erratic policymaking with no clear or consistent economic agenda. Such changes in government leadership could lead to policy shifts that prove risky for business and investment. One example can be seen In South Africa. Falling support for the dominant African National Congress (ANC) will likely force the party into an unprecedented coalition with either hard-left populists or centre-right technocrats this year. This could result in political paralysis, delaying much-needed economic reforms.

(ii) Election-related unrest

The 2024 election cycle could lead to clashes that disrupt the business environment and global supply chains and threaten the safety of staff. In Mexico, where political violence has plagued the country's elections for decades, the army was recently drafted to protect the two leading presidential candidates. In the US, the Capitol Hill riot of January 2021 reflects the risk of post-election unrest when populist candidates refuse to accept the legitimacy of democratic processes.

(iii) Resource nationalism

Success of populist candidates will increase the risks of so-called “resource nationalism” – an admittedly loaded term covering everything from local governments’ legitimate demands for higher royalties from foreign investors, through export curbs on key commodities, to outright illegal expropriation. For example, Mexico’s ruling party candidate will likely maintain the policy of nationalizing the country’s lithium sector and potentially withdraw existing concession rights for mining companies. In South Africa, where unemployment is the key political issue, the next government is likely to force investors to shoulder more responsibility for social programs.

Expropriation and violations of international trade agreements would invariably result in disputes in construction and related projects, leading to arbitration and insurance cases.

(iv) Potential reversal of green policies

This year’s elections will in many cases serve as referendums on green policies, with populists seeking to move away from broad consensus on net zero to turn it into a wedge issue. In the US, a Trump / GOP administration will likely water down or scrap regulations on clean energy, cut tax subsidies for electric vehicles and other green industries, and again withdraw from international commitments like the Paris Agreement. In Europe, victories for far-right parties in the EU parliament election could prompt the European Council to curb the continent’s ambitious Green Deal.

Global Opportunities for Business

(i) Tax cuts under a second Trump administration

A Trump / GOP administration will likely seek to cut corporate and individual tax rates, the former from 21% to as low as 15%. Ultimately, any decision on this matter will need to balance the potential positive impact on business valuations across industries, against the risk to US fiscal credibility from decreased tax revenues – if the financial market upheaval that followed former UK Prime Minister Liz Truss’s similar experiment with tax cuts is anything to go by. Former President Trump has also promised to increase executive control over some federal agencies and reduce funding for others, such as the Federal Trade Commission, which could weaken antitrust and consumer protection restrictions. This could create opportunities for some industries, while also entailing reputational risks.

(ii) Pro-business Labour party in UK

A probable victory for Keir Starmer’s Labour Party in the UK’s general election will represent a return to a broadly centrist, technocratic government. This follows years of instability triggered by Britain’s Brexit vote to leave the EU in 2016, which caused substantial disruption and uncertainty for British businesses trading across the Channel. There is significant opportunity given that Starmer is likely to mend ties with the EU and has pledged to spend GBP 28 billion on green jobs and industry. There may be select nationalization of underperforming services, such as railway companies, while some industries – like utilities – may face tighter regulation.

(iii) Possible shift in Ukraine war trajectory

A growing isolationist stance – especially within the US GOP – could result in an administration that opposes sending further military and financial aid to Ukraine. Meanwhile in Europe, Slovakia’s newly appointed Prime Minister Robert Fico has already announced that he will not support further aid to Ukraine. In addition to Slovakia and Hungary (where Prime Minister Viktor Orban is increasingly aligned with the Kremlin), populists sympathetic to Moscow may also control or influence governments in Austria, Bulgaria, and Romania by the end of 2024. This would severely undermine the West’s ability to maintain a united front on arming Ukraine and sanctioning Russia.

Should Russia gain the decisive upper hand in the conflict as Western military and financial aid to Ukraine ebbs away, security fears on NATO’s eastern flank would damage investment prospects in the region.

(iv) Robust Indian economy under Modi

Prime Minister Narendra Modi will likely win a third term in the spring. Modi will continue to drive India’s economic ascendance, bolstered by geopolitical developments that make New Delhi an indispensable – although increasingly uncomfortable – partner for the West. India will remain a primary destination for Western investment and businesses seeking to diversify away from China. Despite the business environment’s persistent challenges, there will be opportunities from New Delhi’s continued business-friendly reforms, which include infrastructure investment, incentives for manufacturing, easing of labour laws, and other efforts to boost private investment.

Top Takeaways

1. Should nationalist populism prevail, protectionist tendencies will remain strong. There will be disruption risks for global trade and regulatory restrictions on foreign investments, while subsidies for domestic industries will likely continue rising and spreading. There may also be a relaxation in environmental policies – a phenomenon already seen at regional polls last year in Germany’s Bavaria and Hesse states and in Switzerland (where green parties lost ground), and in a watering-down of the UK government’s decarbonization commitments.
2. Populism tends to exploit issues that are particularly polarizing, including racial and anti-immigration grievances, thereby heightening the risk of in-country violence, particularly around election time. Inflation and the high cost of living will continue to drive industrial action and social unrest across multiple countries, including the US and Europe.
3. The US elections will undoubtedly be the most consequential. Should Donald Trump – or certain other Republicans – win the White House, there are likely to be cuts in military and financial aid to Ukraine, which would boost Russia’s prospects in the war. Apart from hobbling Ukraine’s war effort, a US retreat could expose NATO’s eastern flank to a revanchist and newly emboldened Russia. Such security concerns would likely sap investor confidence in the region, especially when combined with the presumably greater fiscal burden for European governments as they ramp up military spending to bolster their own security (and perhaps seek to make up for some of the shortfall in funding for Ukraine left by the US).
4. US-China tensions and trade barriers are here to stay, regardless of a US Republican or Democratic victory.
5. The EU Parliament elections may see a boost to far-right parties, which could deter national governments from pursuing climate policies. Conversely, the probable victory of Keir Starmer’s Labour party in the UK could result in the return of a more ‘global’ Britain and closer ties with the EU again.