What are the risks to the economy?

Topping the list above is the US presidential election scheduled to take place next November.

From the US Presidential Election…

The report said: "In 2024, the United States faces further decline. The US presidential election will exacerbate the country's political divisions, testing American democracy to a degree the country has not experienced in the past 150 years."

That stems from the fact that “the US political system is significantly divided,” and that “public trust in core institutions — like Congress , the judiciary, and the media — is at historic lows,” and “polarization and partisanship are at historic highs,” according to Eurasia Group. And this division will worsen in the run-up to the upcoming election.

Israeli forces in the Gaza Strip in a photo released on January 21.

The internal political divisions in the US have a profound impact on the country’s policies towards its allies and partners. A typical example is the US policy towards Ukraine and Israel in the context of the conflict in Ukraine lasting into its third year with no end in sight, and tensions in the Middle East are unlikely to cool down soon.

…To the "fire starters" of tension

"Kyiv has been dealt a severe blow by US political support and aid to Ukraine. Americans are increasingly divided over the war, and many Republican lawmakers actively oppose more aid. Even if Congress approves additional military assistance for 2024, this will probably be the last significant allocation Kyiv will receive from Washington. If Donald Trump wins, he will sharply cut aid. If President Joe Biden wins, aid will still be difficult to get if Democrats do not control both the US House of Representatives and the US Senate," the report said.

"US support for Ukraine faces stronger headwinds on Capitol Hill, straining the transatlantic alliance." Kyiv may then take "risky" actions to achieve what it can before the next US president takes office if Mr. Biden loses - which could lead to a reduction in aid. Conversely, the expectation that US aid to Ukraine will end in 2025 could embolden Russia to fight," according to the Eurasia Group report.

In the Middle East, former President Donald Trump's prominent support for Israel and willingness to attack Iran could further escalate tensions in the region. Moreover, according to Eurasia Group, the Middle East is no longer quiet and that will continue. "There is a web of deterrence relationships - on one side, Israel and the US, on the other, Iran and its proxies, and the Gulf states are seen as 'third parties' that have so far restrained the conflict in the Gaza Strip to some extent. No country wants a regional war to break out," the report analyzed, adding that because there are so many parties involved, there are risks. Therefore, the current fighting in Gaza could be just the first stage in a wider conflict in 2024. The risk of a wider conflict that the report raises is the risk of Israel attacking Hezbollah forces in Lebanon, leading to a response from many pro-Iranian parties.

The economic picture is not bright.

Not only political and security instability, the world in 2024 also faces many worries, according to Eurasia Group's assessment.

Among them, the prominent economic risk is that the mainland Chinese economy will not recover strongly. As an important driving force, if the Chinese economy does not recover well, it will affect the world economy. However, according to the above report, the recovery process of the Chinese economy is facing 4 major challenges.

First, the growth trend, after China ended its zero-Covid policy, is fading. The boost from reopening in 2023 will disappear as growth slows, unemployment rates rise, etc. Second, the real estate market, which is a pillar of the Chinese economy, is still very weak and has not shown any signs of recovery. Third, important markets for China's exports, notably the US and Europe, are still stagnant, so the decline in demand has severely affected China's exports. Fourth, China has not yet had economic stimulus measures that are convincing enough for investors.

Not only China but also the general situation of the global economy is facing many difficulties. The report of Eurasia Group assessed: "The global inflation shock that began in 2021 will continue to cause strong economic and political drag in 2024. High interest rates due to inflation will slow growth worldwide." However, many countries have "all-in" on policies and even overused some policies, leading to potential risks in both the economy, society and politics.

In addition, trade tensions will cause countries to implement protectionist measures that disrupt the flow of important minerals, increase price volatility and reshape the global supply chain. The minerals mentioned here are essential raw materials for the semiconductor industry, battery production for electric cars, etc.

In addition, a risk that Eurasia Group raises is the El Nino climate phenomenon peaking in the first half of 2024, bringing with it extreme weather conditions leading to food insecurity, increased water stress, logistics disruptions, disease spread, fuel migration and political instability.

All of the above risks will make the world in 2024 even more difficult.

AI will continue to grow strongly in 2024

Artificial intelligence (AI) concerns

According to the report, gaps in AI governance will become apparent by 2024 as AI models and tools become much more powerful, beyond the control of governments.

Last year, the world witnessed a wave of ambitious AI, with governments announcing policies and proposals to collaborate on new standards for AI development. Many of the world's leading corporations have committed to voluntary standards for AI development. The US, China and most G20 members signed the Bletchley Declaration on AI safety. The White House issued an AI executive order. The EU also agreed on the AI ​​Act…

But AI breakthroughs are developing faster than control measures. In addition, disagreements on control policies between countries lead to limitations on control measures. Not only that, the AI ​​competition race can cause countries and technology corporations to "evade" control for commercial interests. Meanwhile, the downsides and potential risks of AI are too obvious. Therefore, despite control measures and promises of many benefits, AI still poses great risks to the world.

Source link: https://thanhnien.vn/rui-ro-nao-cho-kinh-te-chinh-tri-toan-cau-2024-185240124233100691.htm