The approaching year will stand to be a momentous period for democracy on a global scale, as an estimate of over 2 billion voters are anticipated to engage in electoral processes. In 2024, an unprecedented number of almost 60 countries, representing more than 40% of the world’s population and commanding a substantial portion of the global GDP, are slated to conduct national elections.
The verdicts emerging from these polls have the potential to exert profound consequences on the individual economies and can significantly shape the geopolitical landscape. The simultaneous occurrence of numerous ballot box battles poses a potential seismic shift in the geopolitical and economic landscape, introducing a complex interplay that could either enhance or exacerbate global instability.
Notably, two high-profile elections have already transpired in January. Taiwan witnessed the election of a new president, Lai Ching-the, while maintaining allegiance to the Democratic Progressive Party. Meanwhile, in Bangladesh, President Sheikh Hasina secured re-election amid criticism for irregularities on election day and the prior arrest of thousands of opposition members, casting doubt on the fairness and freedom of the electoral process.
The cause for concern in these elections lies in the paramount examination that democracy is poised to undergo. Though all coups fundamentally stand as a rejection of democratic principles, their roots are diverse, stemming from issues such as power abuse, economic challenges, corruption, insurgencies driven by Islamist ideologies, manipulated electoral processes, and personal animosities.
Elections and its impact on the global economy
Over the course of history, the influence of election results on the economy has, surprisingly, manifested in a muted manner. However, the potential for more conspicuous shifts lies in the realm of market movements, where the impact of electoral outcomes could unfold with heightened intensity and broader implications for various sectors.
The impressive performance of Italian stocks and bonds in 2023, positioning them as top performers in Europe, may face a downturn if the ascent of Eurosceptic parties is interpreted as undermining the dedication to European integration. In this context, the trajectory of the dollar is likely to be influenced by shifting election probabilities.
The impact of election results
| Where | When | Potential impact on the economy | Potential impact on financial markets | Geopolitics/trade |
| Taiwan | January | Medium | Low | High |
| Pakistan | February | Low | Low | Low |
| Indonesia | February | High | Low | Low |
| Russia | March | Medium | Medium | Medium |
| India | May | High | High | Medium |
| Mexico | June | Low | Medium | Medium |
| South Africa | July | Low | High | High |
| UK* | TBC* | Low | Low | Medium |
| US | November | Low | High | Low |
Concerns loom over the impact on stocks, particularly in relation to U.S.-China tensions. Should political parties leverage the appeal of trade barriers, caution may prevail among investors. Analysts argue that an escalation in tariffs could trigger inflation, propelling the dollar upward and adversely affecting the yuan, euro, and Mexican peso. This intricate interplay underscores the interconnected nature of political developments and their repercussions on global financial markets.
Authored by
Sarika Tiwari
