Senior Vice President, U.S. Chamber of Commerce Foundation
January 12, 2024
In a world where uncertainty is the only certainty, the Stimson Center's year-ahead analysis provides an essential perspective on global complexities, serving as a critical warning.
The World Economic Forum's new Global Risks Report offers an even more worrisome outlook, with survey findings indicating "a predominantly negative outlook for the world over the next two years that is expected to worsen over the next decade."
These reports have delved into the heart of a "polycrisis"—entangled events cascading worldwide. As Stimson writes, this unraveling of the post-WWII global system means "even more signs of distress will surface in 2024."
Casting a fresh eye without confusing probability and possibility, 10 global risks have caught our attention:
- Gloomy Outlook Prevails: Three out of five countries will reach pre-pandemic business insolvency levels by the end of 2024, including large markets such as the U.S. and Germany. (Allianz)
- Financial Instability: "The significant buildup of debt since the Great Recession and higher rates are leading to a Fiscal Transition, putting pressure on consumers, corporations, and governments." (Stifel)
- Geopolitical tensions threaten market and business confidence, trade, and a renewal of inflation: "The post-COVID era marks the return to geopolitical risks. The Israel-Hamas war adds another dimension to increasing geopolitical strife. The potential for the war to escalate—and to affect the rest of the world through energy supply shocks, supply disruption, and risks to social cohesion—is a key concern." (S&P Global)
- Risk Management Overload: "The feedback loop between drivers of disruption and the disruption they cause will intensify. Expect to see economic pressure and extreme weather feeding into more disruptive elections, state fragility, conflict, mutating cyber, digital and physical risks, geopolitical realignment, and mushrooming regulation." (Control Risks)
- Axis of Rogues: "In 2024, Russia, North Korea, and Iran will boost one another's capabilities and act in increasingly coordinated and disruptive ways on the global stage." (Time)
- Multipolarity: "In 2024, the growing influence of geopolitical swing states and smaller players seeking to change the status quo will create a more complex geopolitical multiverse." (EY)
- Economic Growth to Moderate in 2024: "Subdued growth in the world's largest economies, coupled with tight financial conditions, geopolitical tensions, and narrowing fiscal space, weighs on the short-term growth prospects of many developing and transition economies." (United Nations)
- Lingering Inflation: "Potential causes include tight global labor markets, volatile energy prices, and supply chain problems. Specifically, potential supply chain problems may result from two key shipping 'chokepoints,' the Panama Canal and the Bab-al-Mandeb Strait in the Red Sea." (Charles Schwab)
- Recession Risk: "There's still risk of recession next year; the important point is that even if it did occur it is likely to be a mild one, particularly with the Fed providing ample back-door liquidity to the banking system." (J.P. Morgan)
- Glass Half Full: "Despite a lot of consternation and handwringing amongst investors, rising geopolitical and macroeconomic headwinds are actually creating significant opportunities for allocators willing to invest behind the solutions to the challenges that are plaguing the global economy." (KKR)
The public and private sectors play inextricable roles in global stability. A World Economic Forum insight resonates: "The public and private sectors, alone and in partnership, can play a role in scaling local responses..."
Innovative collaborations are essential as traditional operations falter amid "polycrisis." Strategic foresight spotlights urgent needs for government and industry to secure prosperity, overcoming division to address hybrid threats.
These sobering forecasts alongside galvanizing wake-up calls demand new public-private cooperation and recognition of business as a critical element of national power. The U.S. Chamber Foundation will foster anticipatory dialogue and promote collaboration as risks mount. This era of challenge and change offers opportunities to shape a resilient, flourishing future.
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