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The Outlook for the World in 2024

Michael Weidokal, January 2024

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As the head of one of the world’s leading economic and political research firms, I have been making predictions on what will happen in the world in the coming year for more than 20 years. As a reminder, my ten predictions for 2023 were:

 

•    The world economy would slow, but the US economy would avoid a recession.

•    The war in Ukraine would not end in 2023.

•    Covid-19 would be treated like any other seasonal virus.

•    Inflationary pressures would ease, but not disappear.

•    The threat of popular unrest would remain high around the world.

•    Interest rate hikes would finally end by the end of 2023.

•    2024’s presidential election in the US would dominate US politics in 2023.

•    Labor shortages would persist.

•    Trust in government and technology would decline.

•    India would overtake China in terms of the size of its population.

 

As we head in 2024, we do so with a great deal of concern, as the coming year could be a pivotal moment in modern history as a multitude of technological, political, economic, environmental and social changes are dramatically altering our world.

 

For my predictions for 2024, I have broken them down into three broad categories (political, economy and other). While these predictions cover a lot of territory, there are sure to be some surprises in store for the world in the coming year.

 

Political and Security Predictions for 2024

 

The 2024 Presidential Election in the United States Will Sow Chaos

 

The 2024 United States presidential election will be the most divisive election in the US since 1968, and perhaps since 1860, and we know how that ended. Democrats will try to hold the White House with an aging president and no one in sight to replace him should his health fail. Republicans are once again led by former President Donald Trump, who is also aging while facing a myriad of legal problems that could keep him from running. If it is Biden vs. Trump, it will be a close race. However, there is a greater than 50% chance than at least one of the two front-runners doesn’t make it to the finish line. 

 

The Year of Elections

 

Voters in countries that are home to more than 4.2 billion people will go to the polls in 2024, an all-time record. The most important elections will take place in India, Indonesia, Pakistan, Iran, Mexico, the United Kingdom, South Africa and the European Union. What is certain is that the trend towards right- and left-wing populism, and the increasing fragmentation of political parties and systems, will continue in the coming year.

 

The Decisive Year in Ukraine

 

While the war between Russia and Ukraine may not end, this will be the year in which the outcome of this conflict will become clear. If Ukraine cannot drive Russian forces from more of its territory, it is likely to face pressure from its Western allies to reach a settlement with Russia that could include the ceding of territory in eastern and southern Ukraine to Russia. Given Russia’s struggles in Ukraine, it would certainly agree to such a settlement.

 

Gaza in Ruins, Israel at Risk

 

Israel will fully occupy the Gaza Strip for the entirety of 2024, something that it had hoped to avoid when it withdrew from that territory in 2005. Hamas will have been decimated by Israel’s response to the October 7th attacks, but new militant groups will emerge. For Israel, Hamas’ attack and the conflict that followed will serve as a stark reminder that demographics and geography are not on their side in a volatile region.

 

A Tough Year for US Foreign Policy

 

2024 will be a difficult year for the United States and its foreign policy. First, President Biden will appear weak as the 2024 election turns his administration’s focus inwards. Second, the US will remain stretched too thin as its efforts to focus its foreign policy on countering the rise of China are distracted by wars in Ukraine and the Middle East, and by rising levels of unrest in many other parts of the world.

 

 

Economic Predictions for 2024

 

Slower Growth in the US in 2024

 

While I expected the US economy to perform relatively well in 2023, its performance was even better than expected, particularly when compared to the struggles of other major economies. In 2024, economic growth in the US will slow as consumer spending weakens, but a deep downturn will be averted thanks to the continued strength of the high-tech sector and other high-growth sectors of the economy.

 

Another Tough Year for the Global Economy

 

The global economic slowdown that began in the second half of 2022 and continued throughout 2023 will continue in 2024. China’s economy faces a number of massive demographic and financial problems that will result in slower growth in the coming year. Meanwhile, Europe’s long-term sluggishness will continue in 2024. Only some Asian emerging markets such as India and Vietnam will manage to record strong growth.

 

Inflation Rates Continue to Fall

 

Inflation rates fell faster than many economists had predicted in 2023, due largely to sharp declines in food and energy inflation. This decline will continue in 2024, although the threat of further external shocks and continued wage growth will keep inflation from falling to pre-pandemic levels before the end of this year.

 

Interest Rate Cuts by Late 2024

 

While inflation rates have fallen, core inflation (inflation excluding food and energy) has remained too high for comfort this year. As a result, the Federal Reserve and other central banks have been hesitant to cut interest rates. With inflation forecast to continue to fall, I now expect the first tentative interest rate cuts to be made in the latter part of 2024, with larger cuts to follow in 2025 and 2026.

 

Labor Shortages Persist

 

While job creation growth has slowed in late 2023, and will continue to slow in 2024, this will not alleviate the labor shortages that have plagued many sectors of the economy in recent years. This is particularly true in regions where working-age populations have stagnated or are in decline. Nevertheless, the spread of automation and artificial intelligence will accelerate in 2024, raising hopes that the threat of long-term labor shortages can be alleviated in some sectors of the economy. 

 

 

Five Other Predictions for 2024

 

Artificial Intelligence and the Economy

 

If 2023 was the year in with artificial intelligence went mainstream, 2024 will be the year in which AI begins to have a major impact on the economy. This will be most notable in the workplace, as AI begins to transform entire categories of labor, some of which will be decimated by AI, and others will be blossom. Meanwhile, AI will begin to have a positive impact on productivity growth, the key to our economic prosperity in the 21st century.

 

Other Technological Breakthroughs

 

While artificial intelligence has dominated the headlines, other technological advancements will have a major impact on our world in 2024. For example, quantum computing will boost productivity in the coming year, but will also pose major cybersecurity risks. Sustainable technology is another field that will see major advancement in the coming year. Finally, virtual and augmented reality will continue to become a bigger part of our lives in 2024.

 

An Increased Focus on Climate Change

 

There has been a greater focus on the changing climate around the world in recent years and this will continue in 2024. As the ongoing El Nino in the Pacific Ocean is expected to continue well into next year, 2024 is likely to be another year of record-high temperatures around the world. This is likely to result in major climate-related disasters such as tropical storms, wildfires and droughts across the world, and these will have an increasing impact on the global economy.

 

A Debate Over Sustainability

 

While governments and businesses have dramatically increased their focus on issues related to sustainability, there has been a significant public backlash against efforts to promote sustainability. Recent elections around the world have shown that large segments of the voting public blame such policies for a wide range of economic and societal ills. This trend is likely to continue in 2024 and will play a major role in many of the coming year’s most important elections.

 

Social Divisions Will Continue to Widen

 

The increasing divisions with society that have emerged in recent years will continue to widen in 2024. This is due to the increasing fragmentation of modern society into groups of like-minded individuals that are increasingly isolated from other segments of society. This lack of unity will add to the political and society polarization that has emerged in recent years, making it harder to achieve a sense of unity that is needed to tackle the challenges of the 21st century.

 

2024 will be a pivotal year in the modern history of the world. Much can go wrong, as the wide range of threats facing the world in 2024 would be a daunting challenge for any society, let alone one as divided as ours. As such, we need to come together, both locally and globally, to deal with the challenges facing our world and to fully take advantage of the opportunities that the modern world presents. To do this, we need to regain a sense of unity, both as a country and as a world. Perhaps 2024 will be the year in which this sense of unity returns, but the signs suggest otherwise.

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