Our experts present ten key global topics and trends businesses need to consider in 2024.
1. Global impact of the conflicts between Ukraine and Israel-Hamas
THE Ukrainian War The conflict will continue with high intensity, but it is still unlikely to escalate into a direct conflict between Russia and NATO. Among Ukraine’s Western supporters, domestic political trends, particularly in the United States, will make it more difficult to maintain unity over additional funding and military support. Sanctions and export controls against Russia will continue to pose compliance challenges for international businesses in 2024.
THE Israel-Hamas conflict The situation is expected to ease in early 2024 following a further deterioration of Hamas and increasing international pressure on Israel. Direct Iranian involvement remains unlikely. The conflict has not had a substantial impact on the global economy. However, targeting of international shipping in the southern Red Sea by Yemen’s Houthi rebel movement continues to threaten to temporarily disrupt global supply chains. The political divisions between the United States and the countries of the South which tend to support the Palestinian cause will continue in 2024 over a possible settlement of the conflict.
2. Electoral overload
More than 40 legislative and presidential elections are planned in 2024. Political continuity is likely in many cases, but companies should continue to monitor security and operational impacts during election periods, as well as the impacts of the election less stable countries. coalitions or populists. The US elections in November will have a particularly large impact on geopolitical risk throughout the year, as countries and businesses hedge against possible political instability and a change in US administration. Companies must ensure that risk analysis and monitoring functions are adequately resourced during such a busy year.
3. Geopolitical regulatory competition
Businesses will need to closely monitor regulatory developments if they want to understand how geopolitical competition will play out in 2024. Despite a recent diplomatic rapprochement, the United States and China remain committed to strategic competition. This competition will play out primarily in the regulatory arena, with the United States and China using trade restrictions, export controls and subsidies to protect what each side considers sectors critical to national security. While the EU will continue to tilt politically toward the United States, the bloc will use regulatory measures to strike a balance between “de-risking” its relationship with China and advancing economic relations with Beijing. Key sectors where geopolitical regulatory competition will play out include defense, semiconductors, technology, data protection, critical minerals, aerospace and climate.
4. The rise of hatred
The frequency of hate crimes motivated by racial, ethnic, religious and cultural bias continues to rise around the world, although many incidents almost certainly remain under-reported. Amid the conflict between Israel and Hamas, civil rights groups in the United States and Europe are reporting a sharp increase in anti-Semitic and Islamophobic hate crimes. The 2024 elections will also aggravate latent societal tensions, particularly along racial or religious lines, notably in India, Bangladesh, Pakistan, South Africa, the EU, the United States and South Sudan. Hate crimes are unlikely to directly affect company assets, but individual employees, both in and out of the workplace (including on business trips), could be targeted.
Protest for Anna Ivankova in Athens, Greece on July 11, 2023. Anna was a transsexual person who was brutally murdered yesterday (July 10, 2023) in central Athens. Her name on stage was Ebony Goddess. (Photo by Nikolas Kokovlis/NurPhoto via Getty Images).
5. Terrorism: acute local and regional threats
Despite an overall decline in terrorist incidents globally in recent years, militant and insurgent groups continue to pose serious local and regional threats in West Africa’s Sahel region, Pakistan, Colombia and some parts of the Middle East and Southeast Asia. Geopolitical events – such as the conflict between Israel and Hamas – will continue to motivate both transnational and local terrorist activities. We also anticipate a further rise in so-called mixed, vague and unstable (MUU) violent extremism. MUU actors are motivated by overlapping and potentially inconsistent factors, including ideological radicalization, personal grievances, online conspiracies, and mental health issues. Most UM-motivated activity will remain opportunistic and unpredictable, posing persistent challenges to government security services and corporate security managers.
6. More disruptive environmental activism
Climate activism is a growing concern for businesses and will continue to be as the effects of climate change become more visible. The year 2024 is expected to set new global temperature records due to the consequences of the El Niño phenomenon. Perceived inaction – or even backtracking – by governments and businesses on climate commitments increases the likelihood of widespread protests and more targeted actions. Businesses should expect an increase in disruptive direct actions, such as conference/meeting disruptions, attacks on senior executives’ homes, transportation and infrastructure blockades, and destruction of property. The most threatened sectors remain those of energy, extractive industries, transport, technology and construction. Governments will also remain a key target for activists.
7. Global economic resilience put to the test
Although the IMF projects an increased likelihood of a soft landing for the global economy, global growth will likely remain below the historical average, around 2-3% in 2024. Tighter credit conditions are putting pressure on the increase in debt service costs and has an impact on businesses. and consumer spending. Many governments, facing growing debts and rising service costs, will be forced to cut spending. This will only increase political stability and the risk of unrest. Additionally, the global economic outlook will be influenced by other geopolitical trends, including regional conflicts, sanctions and more protectionist trade policies.
8. Energy transition: the challenge of resource nationalism
As the 2025 climate deadline approaches, decarbonization targets, energy security strategies and green industrial policies will continue to drive investment in renewable energy in 2024 – particularly in China, the EU and the UNITED STATES. Growing demand for essential minerals will improve prospects for the mining sector – and spark new surges of resource nationalism, as producing countries seek to benefit. This year, the United States and Europe will redouble their efforts to defend their auto industries against Chinese competition. Green energy production, electrification and supply chain self-sufficiency are all areas where governments will look to further develop their industrial policies.
Climate activists from Extinction Rebellion march as they hold banners in front of the Senate in The Hague, Netherlands, January 8, 2023. The activists want to block the Utrechtsebaan (A12) again on February 3, against the fossil government support. (Photo by Mouneb Taim/Anadolu via Getty Images)
9. More global sanctions enforcement capabilities
The geopolitics of sanctions will be crucial for businesses in 2024. With the Russian economy proving relatively resilient, the enforcement of Western sanctions will continue to shift towards combating circumvention by third countries. Firms will need to increase their due diligence on counterparties to ensure sanctions compliance. The UK and EU members will continue to expand their sanctions enforcement capabilities, likely mirroring those of the US Office of Foreign Assets Control (OFAC). The complexity and novelty of evolving sanctions regimes are likely – including by design – to deter certain otherwise permissible commercial activities. Export controls on dual-use technologies and critical minerals will continue to grow as an area of economic policy, potentially alongside other market control measures modeled on the G7 oil price cap.
10. AI – prepare for a race for regulation and invention
With the EU passing the AI Act on December 8, businesses should expect increasing regulatory pressures in 2024 in this sector. European legislation will set the regulatory tone for many governments and businesses as they develop their own policies (and work to preserve access to the European market). At the same time, China and the United States will compete with the EU to influence AI standard-setting, adding to the regulatory uncertainty companies already face due to the rapid evolution of technology. In addition to dealing with new regulations, businesses will be forced to stay ahead of the AI innovation curve, particularly with generative AI tools based on extensive language models ( LLM). More accessible and less expensive AI-based tools are already being made available to bad actors for use in influence operations and cyberattacks, and this issue will almost certainly make headlines in some key 2024 elections. However, for businesses fast and brave enough, AI tools will help revolutionize many business operations.
Reflection on our forecasts for 2023
Most of the key trends we forecast for 2023 held true. The war in Ukraine continued unabated and Russia further decoupled from the West, moving ever closer to Asia. The United States and China have continued to use regulatory measures to promote their competing geopolitical goals. Climate-related natural disasters and climate policy were indeed global concerns for governments around the world, and many companies had to readjust their compliance strategies as new ESG regulations came into effect. However, the severe winter energy crisis in the northern hemisphere did not materialize thanks to the efforts of European governments, and planned elections in Bangladesh and Pakistan were postponed until 2024.