The themes for 2024 are largely the same as for 2023, primarily geopolitics and monetary policy, followed by a weakening economy. At least as far as geopolitics is concerned, 2024 could well be described as the “year of solutions”. As the list of geopolitical problems and challenges keeps growing, we may at least hope for some sort of solutions.
Monetary policy
Monetary tightening is over. Experts do not expect it to continue, and at least interest rate hikes are a thing of the past. Indeed, 2024 could see a considerable – or at least cushioning – fall in interest rates in the United States and Europe. It would be aided by inflation slowing down, and slightly deteriorating economic development. The same expectations were in the air a year ago when the wish list for 2023 was drawn up, but developments have been surprisingly slow.
Geopolitics
Geopolitical developments are anything but satisfactory or reassuring. Signs of a cold war are clear; let’s just hope the war remains cold. The cards are on the table. Russia’s role as a bully is winning support in several countries. Iran’s and North Korea’s positions are understandable, as they are facing the same situation as Russia. China is still playing with two hands of cards. One can only hope that China will take its place as the new leading economic power and not jump on the troublemakers’ bandwagon.
Russia's aggression against Ukraine awaits resolution. There are signs that 2024 may see negotiations and a solution to the crisis. If some sort of solution is struck, Russia must be contained, as the sad history of the early days of the Second World War remind us.
Convergence of ideologies
Competing ideologies tend to shape each other. Authoritarian governments monitor their citizens and seek to erode democracies by resorting to hybrid strategies. Democratic states are compelled to restrict freedoms that are incompatible with this new world and tighten controls by adopting the role of a “night watch”. In this respect, the regimes are converging.
US President
The United States will hold extremely important presidential elections in 2024. Geopolitical solutions should perhaps be reached before that. We have less than a year for this. The future US President will represent continuity in a system that is more than 200 years old. Let us hope that the democratic structures hold up despite the attempts to undermine them. The elections and post-election policies will serve as a measure of the leadership of the “free world”.
Europe’s place
Europe must consolidate its position in the world. Anu Bradford has nicely captured Europe's strengths in the “Brussels effect". In the book, she shows that Brussels has used unilateral regulatory measures to make the world a better place and set an example. This is something we need in order to mitigate climate change and control US technological giants and Chinese corporations.
In conclusion
The foregoing section on geopolitics is long. It reflects the seriousness and importance of this theme for countries, people and economies. If solutions are reached in 2024, hopefully the solutions will be sound and sustainable and propel us in the right direction.
In monetary policy, the steps are clearly defined, and the markets are accustomed to predicting them. Monetary policy could well prove the most positive surprise for investors in 2024 and bring healthy returns, provided that geopolitics does not interfere.
The writer is VER's CEO Timo Löyttyniemi.
