As the world turns into a new year, the state of geo-political relations remains tense, with the Ukraine-Russia and Israel-Hamas conflicts continuing. However, predictions suggest that the state of global geopolitical relations will deteriorate as multiple events are set to take place and significantly influence the world. How will these events affect the economy of tomorrow?

The United States vs Itself

The United States is set to hold its democratic elections this year and is predicted to divide the state into two as the democrats battle it out with republicans in the campaign field. The US has been considered one of the most politically dysfunctional states among other advanced industrial democracies. The presidential election is set to deepen the divide and create a tense atmosphere that has not been witnessed for years that will, in effect, undercut the US’s credibility internationally.

Political specialists and researchers have analysed the probability of a victory for former president Donald J. Trump as he looks to enter office for his second term. Specialists guarantee that this election is set to damage America’s social fabric, political institutions, and international standing. This will weaken America’s position on the global stage as Republican lawmakers take up his foreign policy positions and USA allies and adversaries impede his likely policies.

The Democratic Party has a friendly foreign policy approach as they believe foreign assistance and development programmes are powerful tools in promoting peace and security on a global scale. However, the republican party has a different approach, where they tend to militarise their foreign policy approach. This creates tension with other states and tends to reduce allied forces and instead protects the US using its power as its diplomatic weapon.

If Donald J. Trump is to take office for the second term, most of the US’s foreign direct investments and development programmes are likely to be discontinued. This will greatly affect many countries’ economies and leave most markets struggling.

The World and War

With the US holding elections and likely changing its foreign policy, idealists are hopeful that the US will change its position on the Israel-Hamas war. This will plausibly allow the United Nations to invoke a ceasefire and provide a platform for negotiations and possibly a peaceful resolution. The conflict continues to pose risks to the global economy, and geopolitical and political divisions, and invoke global extremism.

Russia’s invasion of Ukraine remains a significant event that has affected the state of the global economy and continues to create a ripple effect on geo-political relations. The European Union has sustained their commitment to adopt Ukraine as a member state, as Russia has half of its sovereign assets frozen with 11 sanctions and many more underway. This will involve more states deferring to other foreign sources of energy and strangling the global energy economy.

The wars show no sign of subsiding anytime soon, continuing to exacerbate the current energy crisis. With many states taking diplomatic actions, either by expressing support for one side or imposing sanctions on another, this has led to diplomatic rivalries as disagreements arise over the positions taken by various states.

Ungoverned Artificial Intelligence and sustainable business

Technology is predicted to outstrip AI governance in 2024 as tech companies remain largely unconstrained and new and more powerful AI tools evolve beyond governments’ control. Multiple businesses are predicted to adopt AI as part of adapting to a sustainable business model. As the green economy grows, researchers state that green solutions often lead to bottom-line growth. Research continues to show that consumers increasingly prefer companies with a solid commitment to reducing their environmental footprint, thus welcoming AI as a key tool to pursue this goal.

AI is also being utilised in the data field as most businesses are looking to monetise data to drive new business opportunities. In 2024, more companies are predicted to streamline their operations. As large scale data collection and AI-driven analytics are democratised, small businesses are soon to adopt AI in their data processing. AI is taking the world by storm and creates a great opportunity for businesses and organisations to grow their industry with the integration of AI in a world where technology continues to evolve.

China and the world

Beijing’s failure to reform the country’s sputtering economic growth model, financial fragilities, and crisis of public confidence are expected to expose gaps in the Chinese Communist Party’s leadership capabilities and increase the risk of social instability. President Xi Jinping’s radical pivot toward large-scale consumer stimulus and structural reform is predicted to result in China’s economic underperformance throughout 2024.

The US and China remain with turbulent economic relationships; however, with shared interests in Taiwan and tech competition, both states have been persuaded that better-managed relations will, in turn serve both sides. This unlikely cooperation has, in turn promoted investor confidence and has attracted tech firms and foreign investments. Taiwan is a mass producer of semiconductors and integrated circuits that are critical components in technological development.

The geopolitical world continues to evolve, presenting numerous opportunities for investors and businesses to engage and tap into their respective markets endlessly. The ongoing foreign relations dynamics continue to impact world economies in unprecedented and unpredictable ways, rippling even to third-party states or disinterested parties. These factors stand out as key influencers worth watching at the onset of 2024, poised to have a significant and far-reaching impact on the world.