This is the first of a four-part article series

As corporate finance and treasury professionals enter 2024, a year considered as the biggest election year in history, with over 70 countries heading to the polls next year, it is a pivotal moment to reflect on the paramount priorities and challenges that characterised 2023, some of which are expected to persist well into the upcoming year. Equally important is to gear up for the newer challenges that are on the horizon for 2024.

Throughout the past 12 months, CTMfile.com has been at the forefront of delivering pertinent cash and treasury management articles, interviews, industry roundups, and podcast discussions that have captured the attention and interest of our target audience. In the first of this four-part article series, we present two key areas that are poised to endure as focal points in 2024 for corporate finance and treasury executives.

 

1. Series of high-profile global elections

According to the Economist (November 13, 2023), in 2024, “Close to 2 billion people in more than 70 countries will head to the polls. Ballots will be cast from Britain to Bangladesh, from India to Indonesia. Yet what sounds like it should be a triumphant year for democracy will be the opposite.”

The Economist article goes on to argue: “Many elections will entrench illiberal rulers. Others will reward the corrupt and incompetent. By far the most important contest, America’s presidential election, will be so poisonous and polarising that it will cast a pall over global politics. Against a backdrop of conflict, from Ukraine to the Middle East, America’s future direction—and with it the world order American leadership has hitherto underwritten—will be on the line. It will be a nerve-racking and dangerous year.”

Furthermore, with social media, generative artificial intelligence (AI), political and business leadership expected to influence many election outcomes, the results are likely to impact geopolitical coordination on key global economic issues. This may bring about greater international economic divergence, trade conflicts and political fragmentation across key regions, heightening the already precarious world economic order.

In its 2024 investment outlook published last month, Goldman Sachs Asset Management (GSAM) noted  that elections in the US, the UK, South Africa, India, Taiwan and Russia will add to “The range of possibilities for the global economy to diverge from its current path,” as was reported in an article published by CNBC on November 21. This will also likely provoke more dispersion across asset classes and sectors, observed GSAM.

“The world economy is lumbering from one shock to another as two brutal wars, stubborn inflation and high borrowing costs pockmark the post-pandemic recovery. The next source of turbulence in the polycrisis era: a packed 2024 election calendar”, cautioned Bloomberg in an article published in October.

The outcomes from 2024’s series of high-profile global elections may bring a swing in balance of power and major policy changes in a number of countries resulting in profound economic and financial implications worldwide and a rise in geopolitical friction and bilateral trade value.

Treasurers should brace for a packed global election calendar that commences with Bangladesh and Taiwan in January 2024 and runs through to the US presidential election in November, followed by the Uzbekistan parliamentary election in December 2024.

Preparing for a wide range of possibilities, including outcomes from the biggest election year in history spanning the European Union, Ukraine, India, Mexico, South Africa, the UK, the US, Russia, Taiwan, and more, will help investors, corporations and their treasury departments navigate the uncertain economic and political landscape with greater thought and resilience.

2. Geopolitical instability: How many international conflicts can the US manage simultaneously?

Corporate treasury conversations are currently dominated by discussions on geopolitical risk, driven by the ongoing Russia-Ukraine war and the Israel-Palestine conflict. Additionally, the cumulative impact of five years of the US-China trade war,  and “Geopolitical tensions – for example, related to Taiwan, Korea, and Russia-NATO – are now believed to pose the greatest risk to the global economy in both the near term and medium term”, as per the Oxford Economics’ latest Global Risk Survey report.

Moreover, Oxford Economics Survey states that “Businesses now see geopolitical tensions as key global threat.” This concern necessitates corporate finance and treasury executives attention, particularly considering the important question posed by the Financial Times in a recently published article: “How many international conflicts can one superpower (the US) handle at the same time?

The Financial Times added, “The Biden administration is currently trying to deal with wars in the Middle East and Europe, while preparing for a surge in tensions between China and Taiwan.” If, as the Financial Times forewarned, “Over the course of the year, China could take its military intimidation of Taiwan to new levels, particularly if the US looks distracted and weakened by events in Ukraine and the Middle East”, this could intensify geopolitical tensions, trigger more trade restrictions, and pose a significant risk to the global economy.

Besides, as the Financial Times reminded, “Western officials believe Russia, China, Iran and North Korea are working together much more closely than before”, which is likely to add another layer of geopolitical unease and compound business uncertainty and market volatility.  

“Navigating the evolving—at times treacherous—geopolitical landscape will likely require access to deep wells of expertise, as geopolitical issues that could have been ignored in the past now stand to directly impact companies’ supply chains and customer bases”, said Ronald Temple, Chief Market Strategist at Lazard’s Asset Management and Financial Advisory businesses, in its Global Outlook 2024 research and insights report last month.

The interplay of all these conflicts and developments has brought rising geopolitical instability and risks to the forefront, also indicating to finance leaders and corporate treasurers that this type of risk is expected to extend into 2024, so creating a strategy to shield their corporations from future geopolitical conflicts or unexpected political threats is imperative.

In conclusion, preparing for the challenges of the upcoming year is a vital strategic undertaking for corporate treasurers and CFOs. Staying abreast of the 2024 global mega elections and the geopolitical landscape is key to staying ahead, identifying opportunities and recognizing risks that might otherwise be overlooked. CTMfile’s content provides valuable resources for staying informed and enhancing your professional knowledge. We encourage you to stay engaged with CTMfile and tune into the OpenTreasury Podcast throughout 2024.

To read the second part of this article series, click here

To read the third part of this article series, click here

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