Social & Political Risk: what to expect in 2024

2024: election fever, rising populism and geopolitical instability

There’s no doubt that 2024 is going to be a tumultuous year for elections, with the first voters gone to the polls in Taiwan in January, and the last in the US in November. This historic wave will involver more than 70 countries (including seven of the world’s most populous), half of the global population and some 55% of global GDP! 

From India to Mexico, via Austria, Tunisia, Indonesia and El Salvador, the elections will provide an opportunity for populist winds to sweep across all five continents. This will give extra momentum to a trend that has taken root over the last ten years and more: the rise of social unrest and (geo)political instability.

"With this super-charged electoral calendar on the horizon, our latest social and political risk index highlights that social and political vulnerability is accelerating around the world, creating uncertainty and instability for our environment in equal measure. The global average score has risen to 38.6%, not far from the 2021 peak (39.4%) following the Covid-19 crisis, and up on pre-Covid levels (2016-2020 average: 36.9%). Our indicators have been announcing that we’re entering a new phase for these risks since the start of the decade."

explains Ruben NIZARD, Economist North America and Head of Political Risk at Coface.

In a world that is reshaping the global geopolitical order -inherited from the end of the Second World War!- some of the elections will prove to be decisive. The US elections will be a pivotal moment for the world landscape, and will certainly be the target of attempts to destabilise it.

The same applies to Taiwan, where the victory of the Democratic Progressive Party (DPP) means that the tensions with China will continue to focus on the status of the island. Likewise, the result of the vote in the US will be critical for future relations between the West and mainland China. The elections will be especially important since they will take place in a stormy international climate characterised by fierce Sino-American competition, Russia's invasion of Ukraine and the war between Israel and Hamas.

The 3 risks to watch out for in 2024

The risks associated with these elections vary in their nature and degree. In some of the countries, even though elections will actually take place, voters will be given only a limited choice. At the same time, the build-up of elections gives us the opportunity to monitor three risk trends.

1. Political shifts and uncertainty

The current socio-economic environment should contribute to a feeling of hostility towards the government in place, bringing uncertainties and volatility for businesses during the election periods. This political uncertainty will be all the more acute in that the rise in populism is sounding a powerful warning. This trend, which has been constant since at least as far back as 2010, was highlighted once more by the electoral success of Geert Wilders and Javier Milei in the Netherlands and Argentina towards the end of last year. As a result, it is even harder to predict what direction government policy will take. 

Social and political vulnerability in Europe is growing fast, and the upcoming elections – especially for the European Parliament – will serve as fertile ground for anti-European extremist movements. In addition, some members of the EU will hold national elections: Austria, Croatia, Finland, Lithuania, Portugal, Romania, Belgium and Slovakia.

2. Social unrest

A second risk is the potential escalation in social unrest fuelled by rising prices, the erosion of trust in politicians and the widespread dissatisfaction of voters. Rising inflation and the slowdown in economic growth have intensified grievances – especially distrust of institutions – that had been bubbling under the surface since well before the Covid health crisis. It is highly possible that the upcoming elections will create an environment for mass demonstrations in several parts of the world.

Seventeen countries in Africa, for example, might organise elections in 2024, on a continent with the highest average social and political vulnerability score and the biggest increase in one year. This dynamic is in keeping with the political instability experienced by numerous African countries over recent years, which has included coups and long-drawn-out conflicts. The recent postponement of the presidential elections in Senegal is a perfect illustration of this. It will also be important to keep a close eye on the electoral process in certain Asian countries, including Sri Lanka, as with recent events in Pakistan.

3. Geopolitical risks

With the stalemate in the war between Russia and Ukraine, heightened tensions in the Middle East, and the expansion of BRICS* to include five new members**, it is clear that the sea change is gaining pace, driven on by deep-seated challenges to Western models and the world order. Against this turbulent geopolitical backdrop, the final round of some of these elections will take on particular importance. 

The DPP's recent triumph in Taiwan doesn’t just have an impact on the 24 million people living on the island and relations between the two sides of the Formosa Strait: it also impacts the global geopolitical dynamic in its entirety. Elsewhere, one of the key issues in the elections in Mexico and India – two of the planet’s most populous countries – will be what position they take up on the world stage. 

In addition, as the fighting continues in Europe, Ukraine and Russia are scheduled to go to the polls, although the elections in the former appear to be in jeopardy. While there is no question that Putin will be re-elected in Russia, voter turnout could give us an indication of popular support for the war. In a nutshell, the packed 2024 election timetable will undoubtedly shape the world order for the years ahead.

Key points for 2024

“The combination of all these factors will help trigger an increase in Coface’s social and political risk indicator. We really do need to take these warning signs seriously: the elections in 2024 will be held in a context of heightened geopolitical tension between the different blocs, with the non-aligned countries taking up position on a case-by-case basis. These complex dynamics won’t just fuel populist tendencies and geopolitical instability; they’ll also contribute to a global climate of uncertainty or widespread anxiety and dissatisfaction. This decade, it seems, is ushering in a new phase of social and political risk, and it’s already looking worrying for the future”, warns Ruben NIZARD.

_{*BRICS: Brazil, Russia, India, China and South Africa.}

_{**Saudi Arabia, Egypt, United Arab Emirates, Ethiopia and Iran.}