Conflicts, AI and Economic Stagnation: the Macro Challenges of the Economy in 2024

The year 2023 was presented just twelve months ago as the year of uncertainty and words like permacrisis or stagflation were the protagonists of the first analyzes of the world to come. A year later, in 2024, the words with catastrophic overtones are still on the board and the geopolitics that obtained its great revival after the outbreak of the pandemic refuses to leave the news.

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From Cidob, they point to a year of economic hangover with debt sustainability

This year, which is barely two days old, promises to be a period of ballot boxes and weapons, as advanced by the Cidob – Barcelona Center for International Affairs in its analysis The World in 2024 . More than seventy countries are called to vote in an environment that think tank experts predict as more conflictive and with greater impunity. The economy and politics may take a turn in the coming months with elections in the United States or the European Union, as well as in Taiwan, India or Mexico.

Uncertainty, violence and immobility are situated in a tense economic scenario. The International Monetary Fund (IMF) noted in its October report that the global recovery is still slow , with growing regional divergences and little margin for policy error, and expects growth to slow to 2.9% this year. as policy tightening begins to take effect.

The figure is well below the average of the previous decade, which reached 3.8%. Thus, 2024 promises to be a year of economic cooling, with a decrease in inflation, although it will remain above the 2% desired by central banks.

From Cidob, they point to a year of economic hangover with debt sustainability. Part of this slowdown in global activity is due to the economic outlook for the world’s second-largest economy.

The latest predictions from the IMF point to growth in 2024 of 4.2%, the lowest figure in 35 years without taking into account the years impacted by the pandemic, weighed down by its strong dependence on the real estate sector and the accumulation of debt. “It will affect third countries unequally, but also the spending and consumption of families,” said Inés Arco, a Cidob researcher specialized in East Asia.

China’s economy prepares for its lowest growth in 35 years

In Spain, the economy is also expected to slow down, recording growth of 1.7% in 2024. Despite the loss of pace, the Spanish economy will continue to grow above the European average , according to the latest IMF forecasts. However, the country will continue to have the worst unemployment data in the euro zone, despite being cut from 11.8% to 11.3%.

“ In the absence of external disturbances, we could have expected a growth rate close to 2.5% thanks, in part, to the support of European funds,” CaixaBank Research analysts have pointed out in their analysis of the outlook for 2024. The rise in interest rates, inflation and low economic growth for the eurozone are the three factors that the research center points out as most damaging for the Spanish economy next year.

In addition to a year of guns, ballot boxes and economic slowdown, 2024 promises to be (even more so) the year of artificial intelligence (AI). The British Collins dictionary has designated it as the word of the year after winning the battle against economic concepts such as greedflation (the use of inflation as an excuse to raise prices) or debanking (the act of depriving a person of banking facilities) and other social concepts. like nepobaby or deinfluencing .

Cidob emphasizes that it will be a “ fundamental year for the regulation of AI .” The European Union has been the first to dare to draft a comprehensive law on AI and the decisions of the coming years can mark the development of the technology and its use for companies. In September of this year, the Future Summit organized by the United Nations will take place, where the Global Digital Compact will be presented.

Along with new challenges come old ghosts and the possibility of another supply chain crisis reappeared at the end of 2023 with the conflict in the Red Sea. For now, the operators MSC, Maersk, CMA and Hapag-Lloyd have suspended their routes through the area following the escalation of attacks by Yemen’s Houthi militias, allies of Hamas, as a result of the war in Gaza.

The shipping companies, which hold 40% of the global market share, will not then pass through the Suez Canal, but will divert the route around the Cape of Good Hope, lengthening their routes by four more days and thus increasing the price of shipping. goods.

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(Featured image by Mathieu Stern via Unsplash)

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First published in PlantaDoce. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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