The late 2010s and early 2020s have been characterized by rising geopolitical tensions and significant policy shifts in key markets. Heading into the middle of the decade, the global environment will remain volatile and unstable.
As executives seek to anticipate and plan for geopolitical disruptions, two key themes will be important to keep in mind in 2024. The first theme is multipolarity. The geopolitical environment is increasingly likely to be upended in a variety of geographies and issue areas. The future of the relationships between the great powers (the US, EU and China) remains uncertain. Geopolitical swing states will expand their influence regarding the topics on the global agenda and how issues are addressed. Emerging and frontier markets will be increasingly vocal about what they perceive to be double standards of Western governments. And smaller actors — including both governments and non-state actors — are likely to
assert themselves both locally and regionally.
This multipolarity is likely to reinforce existing economic diversification trends and the importance of supply chain resiliency.
These trends will be driven in large part by heightened competition between geopolitical blocs or alliance networks. At the same time, multipolarity will likely continue to create challenges in global policy coordination, elevating the uncertainty and severity of any transnational crises that may emerge or expand as the year unfolds.
The second theme is de-risking. Building on trends in recent years, governments will continue to reengage in or expand their reliance on industrial policy to promote greater domestic manufacturing of critical products. This coupling of economic policy with foreign or national security policies will become more prevalent and overt in 2024. Governments will seek to reduce global dependencies, prioritizing national security (broadly defined) over purely economic considerations when designing and implementing policies.
The extent of de-risking policies and regulations will vary across sectors, with the greatest focus on products that governments deem to be strategic. Companies that produce semiconductors, telecommunications networks, renewable energy technologies, electric vehicles (EVs) and biotechnologies are among those that will face more government intervention in their supply chains and investment decisions. More broadly, these economic security policies could fuel inflation and hinder the global spread of innovation.
Multipolarity and de-risking will manifest in many ways throughout the year, with the most visible and impactful areas for business making the top 10 list of geopolitical developments in 2024. Most of them will not be wholly new but rather an evolution of developments from previous years. In fact, all but one of the top 10 developments in 2023 are expected to
evolve into various aspects of the key developments in 2024.
- The geopolitical multiverse
- Geopolitics of AI
- Domestic challenges in the US and China
- Global elections supercycle
- Prioritising economic security
- The diversification agenda
- Geopolitics of the oceans
- Competition for commodities
- Dual track green policies
- Climate adaptation imperative
The top 10 developments in 2024 will also be important signposts in anticipating how globalization is likely to evolve in the coming years. In the future of globalization scenarios, EY analysis identified geopolitical relations and countries’ economic policy stances as two key strategic uncertainties that will shape the global operating environment. The multipolar developments are likely to push the geopolitical environment toward more distinct blocs or networks of alliances. The de-risking developments point toward greater nationalist competition in economic policies, at least for strategic sectors, although in many cases these policies are organized around trading blocs.
The outlook for 2024 is therefore a hardening of the trend in recent years toward a more fragmented global economy.
By EY analysts and global strategist’s
