There are numerous factors that impact the economy — locally, nationally, and globally — and some leaders have to consider the impact tax policies have on . Indeed, the message around tax and the economy is also a strong message for politicians.

Factors impacting tax strategies

A by EY looked at three leading factors that businesses and their internal tax departments need to consider as they make their strategic plans for the remainder of the year. In the United States, real GDP increased 2.8% in the second quarter of 2024, up from 1.4% in the first quarter, and it seems this pace will continue into the second half of the year. Further, to be stable even though there has been a slight decline in job additions in recent months.

Economic growth

This economic growth and stabilization in employment have significant tax implications. Higher economic growth generally leads to increased corporate profits and personal incomes, which in turn boosts tax revenues. As businesses expand and hire more employees, the tax base broadens, leading to higher totals being paid in the form of corporate taxes and individual income taxes. Additionally, higher employment rates mean more people are contributing to payroll taxes, further enhancing tax revenues.

Inflation and interest rates

Inflation now appears to be gradually declining, with the Consumer Price Index showing a 3.0% increase from 12 months ago as of June. The Federal Open Market Committee is expected to lower interest rates by 50 basis points at some point this month. These changes in inflation and interest rates have profound effects on tax policy.

Lower inflation reduces the cost-of-living adjustments that are often built into tax brackets and deductions, potentially resulting in higher effective tax rates for many taxpayers. On the other hand, lower interest rates can reduce the cost of borrowing, encouraging investment and spending.

This can lead to changes in tax incentives and deductions as policymakers adjust to promote economic activities that align with the new interest rate environment. For instance, there could be increased incentives for capital investments or adjustments in mortgage interest deductions to reflect the lower borrowing costs.

Legislative developments

The political landscape of tax legislation is also evolving, with significant changes being considered for the Tax Cuts & Jobs Act (TCJA), which passed in 2017, and the Child Tax Credit (CTC), which is facing procedural challenges in the Senate. These legislative efforts could extend several business tax provisions in the TCJA and increase the refundable CTC amount.

Legislative changes can have direct and immediate impacts on tax liabilities for both businesses and individuals. For businesses, for example, extensions of tax provisions under the TCJA could mean continued benefits from lower corporate tax rates and other incentives that could potentially impacting their tax planning and financial strategies.

IRS developments

Included in the Inflation Reduction Act, passed in 2022, is significant funding for the U.S. Internal Revenue Service. These funds will be allocated to not only enforcement efforts but other IRS programs such as the Direct File program and updates on Employee Retention Credit (ERC) claims. And, not surprisingly, these developments will have an influence how taxes are filed and processed.

For example, aims to simplify the tax filing process, potentially reducing the burden on taxpayers and improving compliance rates. Its purpose is to encourage more accurate and timely tax filings, enhancing the efficiency of tax collection. Updates on ERC claims, on the other hand, highlight the IRS’s focus on scrutinizing tax credits and ensuring their proper utilization.

Navigating the dynamic tax environment

The interplay between economic growth, inflation, legislative changes, and IRS developments creates a dynamic and complex tax environment. Businesses and individuals need to stay informed and adapt their tax strategies to navigate these changes effectively. For businesses, this could mean revisiting their tax planning strategies in order to leverage new incentives and comply with updated regulations.

have lamented that one of the top worries that keeps them up at night is staying up to date with regulations. As the economic landscape continues to evolve, staying proactive and informed is crucial for businesses that want to manage their tax obligations and find new opportunities where available.

Today, tax department leaders will have to work differently in someways just to keep up, and more importantly, to be a strategic partner to their organization.

You can find more about the here.

For background, the Caribbean nation of Haiti, home to more than 11 million people, fell into full collapse on March 11, — a resignation forced by his inability to even return to Haiti due to the deteriorating security there. On April 24, , but the council is so far lacking in direct military support and has an incredibly difficult task ahead, with no guarantee of success.

Haiti’s core challenge has been a rise in gang violence in the nation, in which gangs control an and have killed hundreds of people in recent months in their fight to control more territory.

Gangs, however, may be a severely misleading term that understates the potential threat. The organizations currently operating and spreading violence in Haiti are much closer to small paramilitary and insurgent forces than they are typical street or criminal gangs. Importantly, they have , who have regularly used the gangs’ violence to secure business and political interests. With the dissolution of the military in 1995 due to repeated coups and with a police force too weak to maintain order, these paramilitary organization have become the preferred instrument for maintaining local interests across at all levels of Haitian society. Now, they are out of control, with . Sadly, the nation of Haiti is quickly evolving into a Caribbean version of Somalia, a failed state that will leak its instability into the rest of the region like an oil spill.

21^st century Caribbean pirates

Anyone with a romanticized vision of piracy should rethink that right now. As demonstrated in Somalia and increasingly in non-piracy attacks on commercial shipping in the Red Sea, modern piracy is exceptionally dangerous and destructive, both to the lives of the mariners operating in these routes and the global economy itself. For example, global trade between November and December 2023 as a result of Houthi attacks on commercial shipping in the Red Sea.

Haiti’s core challenge has been a rise in gang violence in the nation, in which gangs control an estimated 80% of Port-au-Prince, the nation’s capital.

When a state collapses into chaos, piracy in some form is likely due to the blend of the activity’s high potential income and a lack of viable alternatives. Ransom payments for captured vessels and their crews often reach millions of dollars, not to mention the value of plundered cargo. Further, piracy can often be undertaken with relatively few resources. For people in failed states, where formal employment opportunities are rare and governance is poor, the high rewards from piracy can be unavoidably attractive.

Yet, there is a notable difference between Haiti and Somalia that is likely to at least mitigate the economic potential of piracy. Haiti, and by extension the Caribbean, is the backyard of the United States Navy, the largest navy in the world. To put it simply, the US has a vested interest in maintaining stability in the Caribbean region and ensuring safe passage for ships traveling through these waters. This deterrence factor, coupled with the extensive surveillance and maritime patrol capabilities of the US, significantly reduces the window of opportunity for piracy to flourish near Haiti as compared to the more remote and less monitored waters off the coast of Somalia. A full-blown return to the golden age of piracy is thus substantially impossible, although attacks small enough to disrupt trade and push up transportation prices are somewhat more plausible.

A complicating factor however is that the U.S. Navy and Coast Guard are almost certain to have their hands full with another, potentially larger problem.

Another refugee crisis, another dangerous water crossing

With the collapse of public services and the economy, Haitian residents face dire shortages of food, clean water, fuel, and medical care, compelling many to flee the country in search of safety and basic necessities. The exodus is not likely to just be a trickle but rather a swelling tide of individuals and families risking perilous journeys by sea, desperate to escape the burgeoning anarchy. The United Nations has already tracked an upswell of refugees fleeing the island of Hispaniola, which Haiti shares with the Dominican Republic.

Given its proximity to Florida and other parts of the US, a large portion of these refugees are likely to attempt to seek refuge here. Past history, including the exodus from Cuba as well as more recent experiences with the refugee crisis in the Mediterranean, shows just how dangerous this type of crossing is to the people attempting it, as well as the political impact it can inspire in the intended destinations.

The Biden administration is already considering using Guantanamo Bay, located only 200 miles from Haiti, . Yet the US immigration system is already strained and the failure of a major immigration bill to pass early this year suggests any kind of action is unlikely until 2025.

With the collapse of public services and the economy, Haitian residents face dire shortages of food, clean water, fuel, and medical care, compelling many to flee the country in search of safety and basic necessities.

What this means is that the US is likely to experience a major surge of refugees coming via a dangerous water crossing at a time when the US is less able to absorb the flow. This refugee crisis is certainly a human catastrophe on its own, but such a mass immigration movement also tends to increase risk more broadly.

The potential for broader risk

While a collapse in Haiti presents challenges concerning piracy and refugees, the most dangerous risks likely would be the potential secondary effects in terms of regional security. A failed state in Haiti could open doors for a spread of illicit activities, such as drugs and weapons trafficking, human trafficking, and terrorism, all ways to exploit the disorder to undermine regional stability and commerce.

Many nations in the region already face high levels of violence and adding a haven for illicit activities would only worsen matters. A collapse in Haiti could also destabilize other fragile states in the Caribbean and Central America, leading to increased migration and political turmoil, creating a domino effect.

One of the most dangerous possibilities involves the discovery of significant oil reserves off Guyana’s coast. While this discovery could greatly improve Guyana’s economy and enhance the region’s geopolitical significance, instability in nearby Haiti could deter investment and raise security costs for oil exploration and production. A deteriorating security situation in the Caribbean might increase the risk of sabotage or terrorist attacks on oil infrastructure, impacting the global energy market. Given Guyana’s territorial dispute with Venezuela over this same oil-rich region, there is the possibility for the situation to further spiral.

Ignoring the risks stemming from Haiti’s collapse into a failed state would be unwise. Regional disruptions are likely, and there’s a real possibility of a catastrophic chain reaction. While there are a number of steps between the collapse of Ariel Henry’s government and the full potential chaos outlined here, the dance has now begun in earnest. Therefore, the situation should be carefully watched by every major entity that has a vested interest in the Caribbean or adjacent regions.

For more on the pressures facing global trade and supply chains, listen to .

Challenge 5: Economic slowdown in China

For the first time in decades, it looks like China’s economic sprint is seriously slowing down, a worrying sign for a global economy that has been reliant on China’s nearly 1.5 billion people to propel its broader development. It is also a situation with wide ranging implications across the political and security sphere, meaning the possible ramifications of a Chinese slowdown is a necessity to understanding how 2024 may develop.

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One of the most pressing issues China is facing is the rise of youth unemployment. The of youth unemployment data showed a jobless rate at a high of 21.3%, with a corresponding increase in the rate at which students returned to rural homes within six months of graduation, . A high youth jobless rate not only slows down potential future growth and allows expensively earned skills to atrophy but could generate social pushback against a government which has a deep and troubled history around student movements.

From a more sectoral perspective, real estate, which accounts for about , is also facing a severe crisis. The debt-laden property giants and have highlighted a sector that had defaulted on $124.5 billion (US) worth of bonds as of October, generating fears of a domino effect on the financial system and the broader economy. But unlike many other nations’ real estate markets, China’s is also a key part of how local governments and state firms raise capital. The result is that, if the real estate sector goes bust, China could be facing a combined crisis in a large part of its economy — the decimation of its people’s savings — while at the same time seeing one of its core local fundraising elements go bust. Economic slowdowns after long periods of growth are already difficult enough as is, but this could be disastrous, turning a case of economic sniffles into a much more consequential collapse.

The risk of international contagion, of a failing Chinese economy pulling down the , is extremely high. As of 2023, for almost 19% of global GDP (PPP), compared to the United States’ 15% share. And because China and the United States take up an inordinate share of global GDP, a global recession could be brought about by the weakening of either country. China’s outsized share of global manufacturing puts a situation on the table where a China-centered spiraling cascade through the international supply chain could again spur a global surge of inflation.

For the first time in decades, it looks like China’s economic sprint is seriously slowing down, a worrying sign for a global economy that has been reliant on China’s nearly 1.5 billion people to propel its broader development.

Of course, the Chinese government is not ignorant of these dangers and have made large efforts trying to contain the and prevent a , but it must play a dangerous game of bailing out some players while preventing others from taking advantage of the safety net and making matters worse. Early signs areÌý that China is managing the crisis, but this is a long game in which the laws of economics viciously punish even slight missteps.

This is where the security and international relations spillover beings. It is only the beginning of President Xi Jinping’s third (unprecedented) term as Chinese president, yet he has multiple ongoing and interconnected issues that he will have to balance while also defusing China’s economic timebomb. A war in Ukraine fought by one of the countries primary allies/proxies is going poorly for Russia. At the same time, China is in the middle of a growing geopolitical rivalry with the United States and other western powers, not to mention the regional powerhouses of India, Japan, and South Korea.

The economic risk for China at home and a potential for costly sparring with geopolitical rivals could go multiple ways in 2024. One possibility is that President Xi becomes less willing to push aggressively on foreign policy while domestic politics are so shaky — . On the other hand, people tend to double-down when backed into a corner and an economic malaise may make other forms of growth (such as military conquest or simply more aggressive foreign policy) the only way to continue advancing China’s interests.

When it comes to the potential for an economic slowdown or a more vicious scenario, operational flexibility and situational awareness may not be enough for companies and organizations. The good news is that there is no need to wing it when it comes to dealing with such large-scale challenges. Events like China’s slowdown have had numerous warning signs over the last few years, allowing those organizations that are informed to prepare now rather than adapt later. For example, preparing a roster of alternate suppliers, identifying key areas of exposure, and having step-by-step instructions ready for when timely responses are required can be the difference between floundering in the moment and executing a vital repositioning.

Challenge 6: Wars and shadow wars

The return of warfare between equal or similar adversaries in 2022 shattered the global community’s assumption that such wars were a relic of the past. In 2023, it now appears that this new dynamic is here to stay, with countries and non-state actors more often using violence as a means of settling conflicts and reaching political goals.

Arguably the initiating dispute to this reawakening — Russia’s war in Ukraine — continues on. While international support for Ukraine was high in the wars’ initial year, 2023 has seen . Aid to the country has tapered off, especially in the United States where support has become a political wedge issue that has resulted in and unless support from the US and NATO is vastly increased, the quagmire is likely to continue.

Arguably, the bulk of the ongoing war’s impact has already been felt, but this is merely the active conflict. However, it is accompanied by another shadowy fight taking place globally. Rather than a direct encounter, Russia often operates using , a type of shadow warfare that overlaps with disinformation campaigns, efforts to subvert elections, and other types of indirect combat that have since spread beyond Ukraine. and are currently seeing their domestic politics strained to the breaking point under similar tactics that could see them pulled more directly into the war, something which increases the likelihood of NATO itself being dragged into the conflict.

In addition, the latter half of 2023 ushered in a Middle Eastern situation that has the potential to not merely impact regional actors but to spiral out of control to the point where global players would inevitably be pulled in. After the October 6 attack on Israeli citizens by Hamas, the Israeli military has been embroiled in an , with fighting in the Gaza Strip, , as well as repelling and , the violence has already spread far beyond Gaza.

In such a dangerous world, businesses and organizations will inevitably be swept up in some kind of geopolitical or economic fallout that will pose an existential threat.

The situation is currently being escalated by the Iran-backed Houthis of Yemen who are , the vital shipping lane connected to the Suez Canal. The use of these proxy forces is how Iran exerts its influence without directly involving itself in the conflict and is another way of waging shadow wars that cause chaos and disruption in other countries. Even more troubling, major players such as the US and China have massive interests in the trade that flows through this area of the world, meaning that they could be pulled into a multi-axis shooting war if the conflict were to spread into areas like the Strait of Hormuz.

Any further discussion of a potential battle between the superpowers needs to include a look at Taiwan, where the question is increasingly becoming armed combat will break out. The good news is that Taiwan is unlikely to become a battlefield in the new year but preparation for an eventual conflict is likely to be a large factor dominating local politics and security concerns. Interestingly, the prelude to a war over Taiwan’s independence is also playing out in semiconductor manufacturing. Despite Taiwan’s tense security concerns, it remains the manufacturer of the , vital technology for both electronics and increasingly important for advances in artificial intelligence (AI). With such a vital hub of world production in the crosshairs of a superpower conflict, it may be unsurprising that nations such as the US and China are competing as well as to .

All of these circumstances, from Ukraine to the Middle East to Taiwan, revolve around the new power axis of the 21st century, with a clash between eastern and western powers. So far this is mostly playing out in shadow wars, the efforts of misinformation around democratic elections, the trade wars involving already strained economies, fighting for natural resources and the challenging impact of AI — all of which are acting as proxies that have powerful nations once more fighting over influence. The post-Soviet era of relative peace and international order seems to have expired in 2023, with a return to the kind of jostling that defined much of the 20^th century.

In such a dangerous world, businesses and organizations will inevitably be swept up in some kind of geopolitical or economic fallout that will pose an existential threat. Drafting, reviewing, and updating contingency plans and crisis-response protocols can give organizations a leg up an increasingly complex world. Going even further as to actually test such plans can teach hard lessons now rather than when organizations cannot afford to pay the cost. This grants the opportunity to focus not simply on the inevitable challenges of 2024, but the equally inevitable opportunities that all years bring.

Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at .

On one hand, the global stage will confront heightened challenges in securing and managing essential resources, a struggle deeply intertwined with geopolitical rivalries. On the other, there is an equally critical race for dominance in the field of AI, a key driver of future economic and strategic power. Both of these challenges demand effort and investment from companies with little guarantee of long-term payoff, especially as the situations shift on a seemingly weekly basis.

In the second of our three-part blog series, each covering two major challenges that the world will face in 2024, we delve into the ongoing challenges resulting from these competitions as well as some of the ways that businesses and organizations can best adapt.

Challenge #3: The fight for natural resources

It would be naïve to say that at any point in recent history nations have stopped competing for natural resources. The annals of the post-World War II era are replete with the strategic jostling for oil, minerals, and water, which has often dictated international relations and economic policies. However, this competition seems to be heating up as it heads into a new phase, especially as the international economy is starting to splinter back into .

You can download the Reuters app and listen to the , which brings you everything you need to know from the frontlines in 10 minutes, every weekday.Ìý

Part of this is simple supply and demand, of course. Countries that were once primarily based on resource extraction — such as China, India, and Brazil — have developed their own industries and are now becoming resource consumers, putting additional pressure on global resources. Combine this with a rush into the resources required by new green energy infrastructure, which includes a plethora of rare earth metals, and it becomes clear why the fight for .

Not surprisingly, one of the hotspots for this competition is a region with a scarred history of such conflicts: . The nation of Ìýin particular, one of the largest producers of precious metals, is facing serious challenges from social unrest, labor disputes, power shortages, and corruption. Meanwhile, the continent’s so-called stretching from West to Central Africa, is home to some of the world’s most sought-after minerals that are essential for electric vehicles, batteries, and electronics. As the name implies, political instability is a hallmark of the region, with within just the last couple years, often involving the intercedence of multiple foreign nations.

As the region’s former colonial power, France’s influence in the region has been in as a wave of popular vitrail against the old imperial power has grown. At the same time, Russian influence in the region is also somewhat uncertain. After years of growing prominence in the region as a peacekeeping and economic partner, Russia’s war in Ukraine may be a major turning point as African operations began competing for equipment and bodies with the Eastern European front.

China may be another story as it is also a major actor in Africa’s natural resource landscape, with a large and diverse presence in trade, investment, aid, and diplomacy. The nation opened its first oversea military base in the African nation of Djibouti in 2017 and has military agreements in . Add in the numerous American and western interests in the region, themselves no , and the potential for conflict to erupt somewhere over Africa’s resources in 2024 seems more like a certainty.

Indeed, instability will continue to be a constant companion to the opportunity for growth that Africa holds, yet as the world splinters into political and economic blocs, conditions could align where Africa is once again carved into fiefdoms of foreign nations. This kind of separation could pull apart not just geography, but the intertwining economic connections businesses, organizations, and peoples are currently struggling to build.

And Africa is not alone as a source of tension, as South America is currently experiencing an escalating crisis over the territory of Guyana. In December, Venezuela held a which focused on a potential annexation of a large swath of neighboring Guyana. The disputed region is , especially valuable for a struggling Venezuela oil industry. Guyana, in the world, is seen as the territory’s rightful owner by the and the potential for the crisis to pull in multiple powers exists. The eruption of a war in South America will bring broader levels of instability, especially in the global oil market but could also highlight how a region that has been relatively peaceful in the 21^st century can quickly spiral out of control.

In a very different corner of the world, Indonesia, the world’s fourth most populous country and a major exporter of coal, copper, and rare earth metals, is gearing up for , which could have significant implications for its natural resource sector. The current president has been pursuing a national industrial agenda that aims to Ìýof the country’s natural resources, especially in those minerals that are vital for green energy production. Such efforts hold the potential to turn the nation from not just a source of valuable natural resources but allow it to inherit the status of a global factory nation, especially as China shifts away from its manufacturing dominance.

All this competition over global natural resources will have significant implications for actors across the spectrum. As the global supply chain becomes more complex and fragmented, the challenges of ensuring its resilience, efficiency, and transparency will also grow, requiring more coordination and cooperation among stakeholders. Acquiring resources will likely only become harder for most industries and require greater attention from leadership as this situation intensifies.

Challenge #4: Artificial Intelligence

AI, as a technology, is unlikely to see such a payoff in 2024 that alone would categorize it as a dominant factor of the year. However, the long-term potential of the technology will force countries and organizations to begin competing for control and access now, because by the time the technology’s potential is realized these footings may be out of reach.

One of the key battlegrounds will be the production and supply of AI chips, which are specialized semiconductors that enable faster and more efficient processing of large amounts of data, an essential material for AI applications. The global AI chip market is expected to grow rapidly in the coming years; however, the market is also highly concentrated and dependent on a few players, mainly those in the United States and Taiwan that have the advanced technology and manufacturing capabilities to produce these chips. China, despite its massive investment and consumption of AI, still lags behind in this area and especially from the US, which has imposed on some of its AI chip makers, citing national security and human rights concerns. This has prompted China to accelerate its efforts to develop its own AI chip industry, through state support, domestic consolidation, and overseas acquisition.

Great attention will be paid to new developments that will begin to show the full potential of technology. and government intervention across the globe will also continue to be a dynamic force, shifting the courses that and take. For example, the has proposed a comprehensive framework for regulating AI applications, which aims to foster trust and innovation in AI, while addressing the ethical and social challenges posed by the technology. On the other hand, the US has adopted a more hands-off approach, relying on existing laws and to oversee AI. China, meanwhile, , investing heavily in its infrastructure, talent, and innovation ecosystem, as well as applying AI to various domains such as health, education, business, and security. China’s AI ambitions, however, have also raised concerns about its governance model, data practices, and geopolitical influence, especially as it seeks to export its AI solutions and standards to other countries.

Data and expertise are two other critical resources for AI development and deployment, and they will also be subject to fierce competition and contention in 2024. Data is the fuel for AI, and the quality, quantity, and diversity of this fuel are crucial for enabling the latest generation of AI models. The type of good data needed is also a scarce and valuable asset, however, and it is often proprietary, sensitive, fragmented, and subject to different rules and standards across jurisdictions. China has already proposed a for generative AI models with other countries likely to follow. Therefore, data collection and sharing will be a contentious issue in 2024, as stakeholders will have to balance the trade-offs between privacy and innovation, security and openness, and sovereignty and cooperation.

Not surprisingly, the demand for AI experts — such as researchers, engineers, and practitioners — will also continue to grow in 2024, as more sectors and domains adopt and integrate AI into their operations and services. However, the supply of AI experts will remain limited and uneven as the sudden rush of utilization outpaces the rate at which new experts can enter the profession.

Generative AI, the white-hot component of the AI tech stack, itself is unlikely to start paying off in 2024 as the world-changer it is said to be. And while the degree of investment into the technology is likely to be a defining feature of the year, Gen AI’s true potential will also be one of the largest question marks for the remainder of the decade.

For corporate leaders, these two challenges of competition over natural resources and AI, means that information and investing in proper due diligence will be keys to success. Leaders need to better understand their organizations’ supply chains, local regulations, and the goals of local and national governments. Without a doubt, getting a full view of the playing field is increasingly important, and those who fail to accurately assess the conditions will be those who fall behind in an increasingly complex world.

Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at .

To that end, in a new three-part blog series, each covering two of these major challenges, we will offer business professionals and governments the insight to better navigate what 2024 may have in store.

Challenge 1: Democracy under attack

Democracy, the system of government that allows people to choose their leaders and hold them accountable, . While this has been a years-long development, 2024 will be a particularly straining year, as more than 50 countries and regional bodies are experiencing major elections in the upcoming year, with four in particular that could have significant global impacts.

One of the most watched and consequential elections will be the presidential race in the United States, where incumbent Joe Biden will seek a second term against a (highly likely) challenge from former president Donald Trump, who has refused to concede his defeat in 2020. It will be a decisive moment for the future of American democracy, which has been eroded by partisan polarization, misinformation, voter suppression, and attacks on the integrity of the electoral system.

You can download the Reuters app and listen to the , which brings you everything you need to know from the frontlines in 10 minutes, every weekday.Ìý

Another key election will be in India, the world’s largest democracy, where Prime Minister Narendra Modi will seek a third term in office. Modi, who leads the Hindu nationalist Bharatiya Janata Party, has been accused of undermining India’s secular and pluralistic traditions, cracking down on dissent, and enacting controversial laws that discriminate against Muslims and other minorities. An effort by the government to — in a democracy already struggling with diversity — has only generated further concerns. Modi’s popularity, however, remains high among his supporters, who credit him with delivering economic growth, fighting corruption, and standing up to China and Pakistan. The 2024 Indian election will determine whether Modi can consolidate his power and agenda, or whether the opposition parties can mount an effective challenge and offer an alternative vision for the country.

The impact of these elections on geopolitics, global business, and society will be enormous, potentially shaping the policies and priorities of some of the world’s largest and most influential economies.

Other elections will also have important ramifications for the region and the world, as they will reflect the state of democracy and governance in their respective countries, as well as their relations with other powers. For instance, Taiwan will continue to be a flashpoint for US-China relations, as the island which China sees as its sovereign territory prepares for a democratic election in mid-January. Outgoing president Tsai Ing-wen’s Democratic Progressive Party seeks to defend her pro-independence stance and resist pressure from Beijing and the opposition party, the Kuomintang, in an election where is expected.

The election in Indonesia, the world’s largest Muslim-majority country and a rising economic power, will be a test of its democratic resilience and its role in Southeast Asia. The outgoing President Joko Widodo, who has served as the nation’s president since 2014, will be stepping aside as he reaches his term limit. His legacy of his Defense Minister Prabowo Subianto, whose vice-presidential running mate is Gibran Rakabuming Raka, the eldest son of President Widodo. Indonesia, for all of its growing power is a very young and thus relatively untested democracy, and it will have an important decision to make for Joko Widodo’s successor in an election already on all sides.

The impact of these elections on geopolitics, global business, and society will be enormous, potentially shaping the policies and priorities of some of the world’s largest and most influential economies. Alliances, trade agreements, and joint ventures are all dependent on the outcomes of these elections and what they say collectively about a prominent style of government.

Given the significance of these elections, it is crucial for business leaders to monitor and understand the political dynamics in these countries, as well as how they will affect the regional and global landscape. A proactive and informed approach to engaging with these democracies will not only help businesses mitigate the risks and uncertainties, but also allow them to seize the opportunities that these events offer.

Challenge 2: A fracturing global economy

Four years after the outbreak of the global pandemic, the international economy remains fragile and uncertain. The pandemic exposed and exacerbated the structural weaknesses and vulnerabilities of an interconnected global economy, one which is beginning to splinter into rival blocs. While potentially in only its early stages, the off shoring, re-shoring, and all-around realignment of global trade between these blocs is going to have a major impact on the world. Supply chains will be reshaped, relationships between companies will have to adapt, and new competitions will undoubtably emerge.

A core challenge facing the global economy going into 2024 continues to be, of course, inflation. In 2024, the inflation rate likely will fluctuate across countries and regions, depending on their economic conditions, policy responses, and external shocks. According to the , the global inflation rate is projected to be 5.8% in 2024, with core inflation not expected to return to target levels of around 2% until 2025. However, this global average masks significant differences among countries and regions. For instance, advanced economies are expected to see inflation of less than 3.0% in 2024, after averaging 4.6% in 2023. (Note: The 2023 figures are IMF projections for the full year given three quarters of data. Final growth figures for 2023 may deviate slightly from these projections.)

In light of this, the United States across the globe, but that is counterbalanced by and an especially sickly .

The inflation dynamic in 2024 will have important implications for the global economy, as it will affect exchange rates, interest rates, asset prices, income distribution, and the debt sustainability of many countries and regions.

Emerging market and developing economies, however, are expected to see 7.8% inflation on-top of the 8.5% inflation they saw in 2023, a significant struggle for nations that were already harder hit by the pandemic. Indeed, some countries such as Argentina, Turkey, and Egypt experiencing inflation at double- and even triple-digit rates.

The inflation dynamic in 2024 will have important implications for the global economy, as it will affect exchange rates, interest rates, asset prices, income distribution, and the debt sustainability of many countries and regions. It will also pose challenges and opportunities for businesses and professionals, which will have to adapt to the changing price levels and expectations while managing the associated risks and uncertainties.

Add to this worrisome economic picture the , the world’s second-largest economy and the largest trading partner of many countries and regions. China has been the main engine of global growth for the past four decades; however, its growth model — which relies heavily on investment, exports, and debt — may have reached its limits. Now, the country is facing multiple headwinds, such as an aging population, high unemployment among younger workers, declining productivity, and environmental and real estate crises. China’s slowdown will have a cascading effecting into foreign policy and other key interest areas, the full extent of which will depend on the responses of its government to the challenge.

Meanwhile, the world’s largest economy, the United States, seems to be better off, with greater optimism among its business leaders, even if the general public remains somewhat pessimistic. With slowing inflation and a historically strong labor market helping to lift real income, the nation’s economic fundamentals appear steadier than at any time since before the pandemic. Still, the US must dodge still-latent and crises, or any other major recession trigger. Yet even then the country may still slip into an economic malaise simply because consumers have convinced themselves of its inevitability. If it remains resilient, however, a strong US economy could send positive ripples across the business and political world.

Conclusion

In 2024, democracy will be under stress, as authoritarian leanings will seek to make a mark in upcoming elections and populist movements challenge the established institutions. At the same time, the global economy is likely to face multiple challenges and uncertainties, as well as some opportunities for recovery and resilience.

While these are major challenges — and only two of the six largest factors we’ll be covering in this series — we have to acknowledge that unforeseen occurrences can rapidly shift the state of the world, and are in fact, becoming alarmingly common. An assassin’s bullet, a heart attack, a natural climate disaster, a war, or even another pandemic, can impact the world in ways that cannot be predicted.

As such, organization leaders need to maintain the flexibility they were forced to develop during the pandemic as part of a plan of strategic preparation to face whatever 2024 has in store.

You can read the second part of this series, focusing on the global competition for natural resources and artificial intelligence, here.

Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at .