Countries representing the majority of the world’s economic output are gearing up for a series of elections throughout 2024, with potential repercussions for global markets. From Europe to the United States, these elections will shape the political landscape and impact key areas such as trade, economy, and international relations. Here are the key elections to watch and the potential market risks they present.
Starting in Europe, several countries are set to hold significant elections. In November 2023, Geert Wilders’ Freedom Party’s surprise victory in the Netherlands sparked a wave of eurosceptic sentiment. With the lead in Austrian polls held by the Freedom Party’s namesake, eurosceptic gains could grow. In Portugal, the Chega party’s vote may double, although left-leaning parties currently lead there. The rise of far-right parties in the European Union could weaken the commitment to European integration and have repercussions for Italian stocks and bonds, which have benefitted from reduced riskiness.
Moving to Russia, President Vladimir Putin is expected to win another six-year term in the March election. Western governments have considered seizing frozen Russian assets, which could lead to retaliation. The Russian economy has benefited from increased defense spending due to the war in Ukraine, while inflation has forced interest rates higher. Putin’s stance on Ukraine during the campaign could provide insight into potential future developments.
In Turkey, President Tayyip Erdogan’s reelection in May 2023 initiated a return to orthodox economics that attracted international investors. However, concerns over a weak lira and high inflation persist. Investors will closely monitor Erdogan’s approach, particularly if he deviates from the orthodox pivot. Any uncertainty in Turkey could affect the country’s bond market and currency.
India’s national elections in April or May could see Narendra Modi secure a third term as prime minister. The long-standing leader of the Hindu nationalist Bharatiya Janata Party (BJP) has attracted investments from those moving cash out of China. However, the BJP’s persistence in power relies on managing persistent inflation and potentially forming a coalition government if an outright majority is not achieved. Changes in fiscal populism and commodity export restrictions could impact India’s fiscal deficit and domestic market borrowing.
Mexico’s June elections involve a presidential race and a full Congress reshuffle. Claudia Sheinbaum, the candidate from the incumbent National Regeneration Movement (Morena) party, holds a significant lead. But amid increased spending drives, concerns of heftier spending impacting the peso and government bonds arise.
In South Africa, the ruling African National Congress faces the risk of losing its parliamentary majority for the first time since 1994. Economic turmoil, power cuts, austerity measures, and graft allegations have eroded support. The outcome could result in eased austerity measures and increased social spending, affecting public finances and the country’s currency.
In the United States, a highly anticipated election in November features a potential rematch between former President Donald Trump and current President Joe Biden. The 2024 election is expected to be closely contested, with concerns of social unrest lingering. The election’s outcome could influence trade tensions, affect consumer sentiment, and impact currency and stock markets. Additionally, spending cut pledges from either party may disrupt a popular U.S. bonds trade that bets on increased government borrowing.
Looking to the United Kingdom, expected elections by the end of 2024 could see the opposition Labour party, led by Keir Starmer, take the lead in the polls. The potential change in government could impact government bonds, given the country’s stagnant economy and tight fiscal budget. Labour’s plans to loosen planning rules and make targeted changes to tax rules could affect house-builders and energy companies.
In Venezuela, incumbent President Nicolás Maduro has an advantage in the presidential elections, while main opposition candidate María Corina Machado is banned from participating. The election’s outcome will influence the country’s stocks and bonds, as well as potential debt restructuring efforts.
As these elections unfold, the world will be closely monitoring their outcomes and the ensuing implications for global markets. From shifts in economic policies to potential changes in international relations, the results of these elections will shape the direction of the global economy in the coming years.
