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26 Mar 2024

NBK Wealth Thought Leader: Geopolitics and Markets in 2024

The year 2024 is set to witness a historic wave of elections in 80 nations, involving over 2 billion voters, including major countries. This democratic exercise will shape the global geopolitical landscape amidst increasing polarization, governance challenges, and geoeconomic fragmentation. The outcomes of these elections will have implications for macroeconomics, financial markets, and international order, with potential effects on fiscal discipline and long-term sustainability.

2024 is anticipated to be one of the busiest election years, with over 80 nations and territories, representing more than half the world’s population, participating in the democratic process. Countries like India, the United States, Indonesia, Pakistan, Russia, Mexico, and South Africa, along with the European Union and the UK, are among those holding elections. Around 2 billion voters, accounting for 25% of the world’s adult population, will be casting their votes. Some countries, such as Bangladesh, Taiwan, Pakistan, Indonesia, Iran, and Egypt, have already conducted their elections.

The global geopolitical landscape is influenced by increasing polarization and governance challenges, leading to a shift in the balance of power. Geopolitical events, like the US presidential election, have a significant impact on global markets through changes in fiscal policies, trade relations, and regulatory measures. Geoeconomic fragmentation and power struggles can result in inflation, supply chain disruptions, and market volatility. The interplay between geopolitics and economics shapes market dynamics and international cooperation.

The ongoing geopolitical tensions have led to the formation of new alliances and blocs, challenging the existing global order. Regional conflicts and financial sanctions have increased, affecting economic stability. The intertwining of geopolitics and economics has created winners and losers, with countries like India and Mexico adapting to changing trade patterns. The competition for technological dominance between China and the US, along with geopolitical rivalries, has reshaped global economic dynamics.

The upcoming global election cycle poses challenges to fiscal discipline in both Developed and Emerging markets due to the rise of populism and increased deficit spending. Public debt levels have surged, impacting long-term sustainability and market volatility. Geopolitical risks, combined with economic uncertainties, create a complex environment for businesses and investors, affecting market cycles and investment decisions.

The US elections are crucial for global economic prospects, as shifts in policy areas like trade, fiscal stance, and regulatory policies can influence interest rates, currency markets, and equity markets. The potential outcomes of the US elections will have far-reaching implications on international relations and market dynamics. Geopolitical events can lead to changes in economic growth expectations, impacting asset valuations and market performance.

The evolving geopolitical landscape could affect the GCC region, particularly Kuwait, through changes in oil prices and global trade dynamics. Diplomatic efforts and geopolitical stability play a key role in shaping economic outcomes for oil-exporting countries. A peaceful international order can lead to positive changes in energy transition and economic cooperation, while geopolitical tensions may result in higher inflation and economic challenges.

In conclusion, the intersection of geopolitics, economics, and elections in 2024 will shape the global landscape and market dynamics. The outcomes of these elections will have implications for international cooperation, economic stability, and market performance. Navigating through geopolitical uncertainties and economic challenges requires a strategic approach and a forward-looking perspective to address the complexities of the modern world.

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