The Shape of 2024: Setting the Trajectory for the World’s Transition

2023 was a turbulent year even by standards of the 2020s, standards which would have been considered inconceivable only a decade ago, given the decade had begun with a pandemic, a global recession, and a war. An unprecedented ‘polycrisis’ of interrelated political, social, economic, and environmental disruptions unfolded throughout the year, threatening global peace, prosperity, and progress towards a better future. The war between Russia-Ukraine continued to grind on through the year, following a failed Ukrainian counteroffensive early in the year, and flagging support from its allies. Hamas’ horrific terrorist attack on Israel in October triggered an ongoing war that has devastated Gaza with a higher Palestinian death rate than any war this century. ¹ A banking crisis in America was (narrowly) averted, but not without casualties including Credit Suisse and Silicon Valley Bank, while fears over continued inflation destabilized financial markets before major central banks asserted control. And generative AI exploded into the public view promising to transform nearly every industry, with ChatGPT becoming the fastest growing consumer app ever. A rare bright spot in the past year included the World Health Organization (WHO) officially declaring the end of the COVID-19 pandemic, although its long term social and economic costs continued to be felt around the world.

In terms of longer-term trends and impacts, the UN Sustainable Development Goals (SDGs) reached their midway point and were found to be far off track across the board. Moreover, the year has seemingly proved that the impacts of climate change have well and truly arrived. 2023 shattered a number of climate records, with greenhouse gas levels at a record high, global temperatures at a record high, sea level rise at a record high, and Antarctic sea ice at a record low.

Against this backdrop, the stakes are high for 2024, with the unresolved challenges of the past year threatening not only to roll over into the coming one, but to conflate and exacerbate global disruptions.

This month’s Sign of the Times, the first of the year, looks at the ten potentially pivotal political, economic, technological, and social themes and events that will shape 2024.

The Ten Themes and Events That Will Shape 2024

1. Russia-Ukraine War: Risk of Frozen Conflict

2. Israel-Hamas War: Conflict without End

3. US Presidential Elections: A Fork in the Road

4. Artificial Intelligence: A Breakthrough Year

5. US-China Relations: Stabilization or Deterioration

6. COP29: Turning the Corner?

7. Middle East Stability: Reset Opportunity Having mined deeper and

8. India’s General Elections: Geopolitical Implications?

9. The Global Economy: A Brittle Affair

10. The Sustainability Transition: SDGs Timing Near Unattainable

1. Russia-Ukraine War: Risk of Frozen Conflict

US$1 trillion – the total cost of the Russia-Ukraine War to the global economy in 2023 ²

Almost two years in and with the estimated causalities crossing 500,000, there is no end in sight to the Russia-Ukraine war. With Russia having ramped up military spending and weapons production, 2024 could be a make-or-break year for the Ukraine, which remain wholly dependent on military hardware from the West. With Western support for Ukraine showing signs of fatigue after €240 billion having been spent to date, 3 future military aid packages may shrink significantly in size, placing into doubt Ukraine’s ability to successfully defend itself, much less mount effective counteroffensives.

2. Israel-Hamas War: Conflict without End

Estimated 25,000 of the Gaza population killed since the start of Israel-Hamas war

Following the Hamas terror attack in October that killed 1,200 Israelis with many tortured and abused before being killed, the assault by Israeli forces on Gaza has passed the 100-day mark, leaving the majority of the territory unliveable, with 70 percent of homes having been damaged or destroyed, 4 and some 85 percent of Gaza’s population, around 1.9 million people, having been internally displaced.5 In the face of an escalating humanitarian crisis, with half of the population at risk of starvation, Israel has to date continued to resist international calls for a halt to hostilities, pursuing the increasingly impossible goal of totally eradicating Hamas.

3. US Elections: A Fork in the Road

48% vs 48% - The even split of voters between Joe Biden and Donald Trump in a January 8th, 2023, poll ⁶

With Donald Trump having routed the Republican competition in January’s Iowa caucus, barring a change in others, the 2024 US presidential election looks set to be a rematch between Joe Biden and Donald Trump. The candidates offer sharply divergent views on American domestic affairs, foreign policy and the future of the international order, and the outcome will therefore impact the fate of global democracy. With Trump having demonstrated his willingness to attack established democratic norms and set sights on a shift in power from government institutions to centralised ones, the current election raises significant concerns regarding a legitimate free and fair transfer of executive power in the world’s premier geopolitical power, as well as the nature of American democracy post the election.

4. Artificial Intelligence: A Breakthrough Year

2 months – the time from launch that it took ChatGPT to win 100 million users

The coming year will likely mark a watershed moment for generative AI. Apple’s plan to integrate AI into billions of mobile and computing devices will turbocharge global adoption and enable AI models to further scale their capabilities, achieving breakthroughs in customer experience, driving organizational enhancements and revolutionizing R&D, among other use cases. But AI advances are moving much faster than governance, risking gaps in AI governance emerging in 2024 driving early signs of the economic, industrial and jobs dislocation as well as impacting the major elections set for 2024.

5. US-China Relations: Stabilisation or Deterioration

2 position fall – Change in China’s rank in the list of America’s largest trade partners in since 2023, down from 1st to currently 3rd behind Mexico and Canada

US-China relations frayed further in 2023 in the face of the countries’ growing technological, economic, military, and geopolitical rivalry, ending the year in an uneasy détente following an attempted relationship reset in meeting between U.S. President Joe Biden and Chinese President Xi Jinping in November. However, the recent re-election of the (pro-independence) Democratic Progressive Party in Taiwan tees up the island as a potential flashpoint for US-China relations, as do intensifying stand-offs between China and US allies in the South China Seas. At the same time, the ongoing trade war, export restrictions for strategic semiconductor and US investment restrictions in Chinese technologies will further test the attempted thaw, with the US presidential elections acting as the biggest wild card, with a re-elected Trump possibly raising tensions further on issues of trade, while withdrawing support from regional allies on security issues.

6. COP29: Turning the Corner?

30% - the increase in domestic natural gas production over the next decade announced by Azerbaijan, the host of the COP29 climate talks

Despite some important progress, such as an agreement to support vulnerable nations facing the worst of climate change’s impact, COP28 fell short of delivering the decisive climate action needed to meet the Paris Agreement goals. Specifically, no precise agreement was reached on the phase out of fossil fuels, which is believed to be critical to meeting the 1.5°C target, with the joint statement released at the conference end marking countries only agreeing to “transition away from” fossil fuels. While COP28 has been called the “Beginning of the End” of the fossil fuel era, 9 the coming year will be critical in terms of setting new climate finance goals and new nationally determined contributions aligned with the 1.5°C target, given that global greenhouse gas emissions will need to be cut 43% by 2030, compared to 2019 levels, to limit global warming.

7. Middle East Stability

46,000 – the number of violent deaths from armed conflicts in the Middle East in 2023 ¹⁰

At the beginning of 2024, the outlook for the Middle East is a bleak one with multiple conflicts underway that risk escalating and being conjoined into a regional conflagration: Israel’s war on Hamas has not only devasted Gaza, but also triggered violent responses by Iran’s so-called proxies in the region, with Hezbollah firing rockets at Israel from Lebanon and Houthis in Yemen attacking international shipping in the Rea Sea, which in turn has already prompted air strikes by US and UK military forces. Further, civil wars continue to be waged in Libya, Syria, Yemen, and Sudan. These conflicts have upended the region’s long-term shift towards greater stability, and risk undoing progress made by major countries in the region to create a regional security order. Navigating the related economic, political, and security challenges that these conflicts are driving will likely require regional powers to work together during the coming year.

8. India’s General Election: Geopolitical Implications?

950 million – the number of eligible voters in India’s 2024 election ¹¹

In the decade that Narendra Modi has led India, the country has grown from the world’s tenth largest economy to its fifth. Expectations are clear that he and his party, the BJP, are set to win a third term India’s 2024 general election, he will likely oversee the country becoming the world’s third largest economy. With India emerging as a major geopolitical power bloc, the government’s future domestic, defence and foreign policy priorities will have potential implications far beyond the country’s own borders. For the government to successfully execute these priorities, it will need unity, or at least peaceful co-existence across the Global South, and at home. This will require Mr Modi and his party to carefully manage internal divisions and tensions given India’s large and heterogenous population, and elements of the BJP coalition that want to impose a Hindu nationalist agenda which risks further alienating hundreds of millions of Indians who do not belong to the country’s Hindu majority

9. The Global Economy: A Brittle Affair

1.2% - average projected GDP growth of advanced economies in 2024, down from 1.5% last year ¹²

The global economic outlook is a fragile one in 2024. Global growth is projected to slow from 3.0% to 2023 and 2.9%, well below the average of 3.8% of the past two decades. And while inflation is expected to decline from 6.9% to 5.8%, it is expected to still remain too high.13 Economic policy will accordingly face a challenging balancing act, with almost zero margin for policy error. Europe faces the risk of recession, while US economic activity is being shored up by a ballooning federal deficit as the government continues to increase borrowing.

10. The Sustainability Transition: SDGs Nearly Unattainable

US$13-17 trillion – the estimated annual funding gap to achieve the SDGs by 2030 ¹⁴

At their half mark since their adoption in 2015 and their eventual target (2030), the UN SDGs are at a severe risk of being missed. Progress made in the first decade of this century, that galvanised the will for the SDGs, has stalled and in some cases reversed. A total of US$132-175 trillion investment is now required until 2030 to meet the goals, and at current rates of funding, there is a shortfall of US$103-137 trillion. Total sustainability debt issuances, after increasing c.5x between 2018 and 2021 to over US$1 trillion, fell in 2022 and only partially recovered in 2023. However, innovation, and progress on several technological breakthroughs means that targeted investments in scaling certain existing technologies can help substantially accelerate progress towards the SDGs.

Conclusion.

As 2024 opens much of the world is at war, with over 50 conflicts impacting nearly a quarter of the global population, with wars raging in Israel and Gaza, Ukraine, Myanmar, Sudan, and many other places. Each of these wars represents a humanitarian, economic and security crisis that carries potentially significant geopolitical risks.

At the same time, 76 countries, home to half the world’s population, are scheduled to hold elections this year in what has been a period of sustained democratic backsliding. In some cases, such as Russia, the outcomes of the election are a foregone conclusion and its impacts have been fully priced into the global outlook. Others, such as America’s presidential election, appear to be a coin toss, albeit one with significant long term geopolitical implications.

In the face of these risks and uncertainties, 2024 has the potential to be a decisive year for a liberal global order that has received a significant battering in recent years. Its future survival will likely largely depend on the outcomes of the ten events outlined above. For it to be stabilised it will need to:

1. Provide a greater benefit than challengers such as China and disrupters such as Russia,

2. Withstand internal challengers, particularly arising from populists, nationalists, and national populism,

3. Present a compelling vision to integrate the Global South into the order,

4. Achieve real breakthroughs in addressing global challenges such as climate change and AI governance, and

5. Be and be perceived to be a positive moral force, and a powerful agent of progress, in the world at large.

A further decline of the order would leave a global governance gap that is unlikely to be filled quickly, given the lack of compelling or even plausible alternatives. As a unilateral alternative, China appears to have at least a partial plan, offering an order based on transactional or mercantile relationships, which implies minimal shared norms a far more fragmented world. Among multilateral alternatives, the BRICS group aspires to challenge Western leadership, and it has recently expanded its ranks to include countries as varied as Saudi Arabia, Iran, Argentina, and Egypt. However, at this stage, the unifying force may be only an agreement on is its opposition to the current order.

A new bloc is potentially emerging though, with India emerging as leader of the Global South while at the same time strategic aligning with the geopolitical interests of developed democracies like the US, Europe, UK, Australia, Japan, and other major powers. The West hold at the hope that India remains a strong democracy with liberal socio-political values, grows economically to matter internationally, and serves as a counterbalance to China’s unilateral political, economic, and social trajectory. And that working together, the West with India, offer a more compelling vision to address the issues and risks facing the Global South and publics at home.

While the waning current global order is unlikely to be able to fully manage the various risks facing the world, our collective choices will determine the outcomes and middle paths of the ten events and themes between the two extremes outlined above. However, over the near term the road ahead for the world promises to be a rocky one.