The ten transformative trends that will shape 2024
The top ten geopolitical developments that will influence the course of the world in 2024 are identified by the latest edition of EY-Parthenon’s regular report, 2024 Geostrategic Outlook.
As noted, intensifying geopolitical rivalries in a multipolar world system with an increased number of strategic players will compel governments and businesses to place greater emphasis on building resilience against emerging risks in 2024.
In more detail, the ten transformative trends that will shape 2024 are:
- 1. The emerging global strategic players: While competition between the US, EU, Russia and China will continue, a significant number of emerging players such as India, Brazil, Turkey, South Africa, Iran and Saudi Arabia will attempt to strengthen their regional or even global role, complicating international balances.
- 2. The Geopolitical Competition for Artificial Intelligence:
- The “battle” for innovation and the further development of artificial intelligence, combined with different regulatory approaches, will accelerate the shift towards the creation of new geopolitical formations. The current primacy of the US in this technology may be challenged, mainly by China, but also by forces that will shape a less strict regulatory environment.
- 3. Domestic challenges in the US and China: In the US, polarizing trends and social tensions will intensify during the pre-election period, intensifying governance problems. Accordingly, in China, the effectiveness of macroeconomic policy may be called into question as the high growth rates of recent decades recede. These developments are likely to affect the global growth rate.
- 4. A cycle of important electoral contests: 2024 is a year of crucial electoral contests, in countries representing 54% of the world’s population and 60% of GDP. Among others, elections in the US, the UK, India, Mexico, South Africa, Taiwan, but also pan-European for the European Parliament, will likely lead to new approaches to industrial policy, climate change, and the ongoing hostilities.
- 5. Prioritizing economic security: The pandemic and the war in Ukraine have highlighted the dangers of national economies’ dependence on globalized supply chains. Governments have responded by bringing the concept of industrial policy back to the fore, with the aim of boosting domestic production of critical goods, a development that is expected to lead to an ever closer link between economic policy and national security policy.
- 6. The agenda of diversification of supply sources: The need to rethink supply chains is likely to benefit markets located on the periphery of strong economies, such as Mexico for the US, or Turkey and Morocco for Europe.
- 7. The geopolitics of the seas: Half the world’s population lives within about 161 kilometers (100 miles) of the sea, 90% of goods are transported via sea lanes and 95% of the world’s data via undersea cables, while a third of the energy produced is offshore. Competition for access and control of the seas will intensify in 2024, with significant implications for supply chains, data flow, food supply and energy self-sufficiency.
- 8. Competition for essential goods: Climate change, the war in Ukraine and the energy transition are reshaping the dynamics of supply and demand for a significant number of essential goods. Global competition to secure supplies of critical minerals, food, and water is expected to intensify. China’s privileged position in the supply of materials necessary for the manufacture of batteries will be challenged, while the need to substitute Ukraine’s grain exports will lead to a decrease in the land available for growing grain intended for the production of biofuels.
- 9. Pressures to roll back climate policies: The economic slowdown and high inflation are forcing many governments to back down on emissions reduction targets due to their high short-term costs. At the same time, however, government support for the green economy is increasing. The shaping of the climate policies and regulatory framework in 2024 will be decisively influenced by the needs for economic development and energy security, leading to multi-speed policies.
- 10. The imperative of climate adaptation: Over the past 30 years, climate policies have focused on reducing greenhouse gas emissions to moderate the pace of climate change. But climate change is now a reality – temperatures between 2014 and 2022 were the hottest on record – and in 2024, extreme weather events are expected to intensify, with impacts that could include heavy economic costs, food shortages, social unrest, intensity of migration flows and even wars. With this data, the burden of policy is now shifting to taking immediate measures to address the impact of the climate crisis.
According to EY’s research, each of these top ten geopolitical developments analyzed in the report is expected to directly impact specific sectors of the economy and geographic regions, requiring specific initiatives to mitigate risks and capitalize on emerging opportunities. However, their wider impact will affect all businesses around the world. With this in mind, the report concludes with three strategic recommendations to help businesses prepare for 2024:
- Incorporating geopolitical scenarios into business models and strategies: In a period of profound changes in the international system, understanding geopolitical developments has become more important than ever for the formulation of corporate strategy. The integration of the geopolitical factor into the corporate strategy will be an ever greater competitive advantage.
- Increasing the resilience of global supply chains: The supply chains of most businesses are now exposed to geopolitical developments. Businesses must adapt their operating model and supply chain strategy to strengthen their resilience to potential geopolitical disruptions.
- Adapting the strategy for sustainable development to the geopolitical reality: The two dominant trends of the multipolarity of the system and the need to reduce exposure to risks, now decisively influence governmental approaches to policies related to climate change and natural resources. Businesses should integrate new policies and regulations into their sustainability strategies, and early assess how these policies may evolve in the future.
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