An uncertain road map for the economy

The United States and the European Union put their interests before promoting free trade. Donald Trump's return to the White House could alter the geopolitics of the camps.

The years since the start of the Covid-19 pandemic have been marked by dramatic uncertainty. Continuity of crises (first health, then raw materials, then geopolitics and finally prices)Testing the resilience of the global economy. All this has made the forecasts of multilateral institutions less reliable, leaving governments, institutions

The years since the start of the Covid-19 pandemic have been marked by dramatic uncertainty. Continuity of crises (first health, then raw materials, then geopolitics and finally prices)Testing the resilience of the global economy. All of this has made multilateral institutions' forecasts less reliable, leaving governments, companies and investors without a reliable road map they can follow to shape their own scenarios. In this sense, 2024 will not be an exception, because in the next twelve months several electoral calls are scheduled across the planet, for which the most serious candidates have seen the reinforcement of their aspirations, as well as the correction of financial imbalances derived from the fight. Against the backdrop of the coronavirus and growing technological competition between superpowers, it is making it even more complicated to propose plausible investment scenarios.

More fragmentation. There is no doubt that economic globalization will continue to advance as the governments that encouraged it for decades abandon its safeguards. Both the United States and the European Union are pursuing their strategic interests based on security, technology, or climate agendas to the detriment of strengthening economic and trade ties. The return of the block dynamic, fueled by shortages of critical products at the start of the health crisis and then by Russia's illegal occupation of Ukraine, is causing a massive review of major economies' sources of supply, raising the risk of dilution. The benefits of free trade made global inflation and rapid progress possible in the pre-Covid decade. Reversing this path would be particularly damaging to developing countries, as it would depend on the hegemonic power of the alliances to which they belong and gradually lose beneficial linkages with competing economies. Companies must re-evaluate their supply chain to account for these new geostrategic alliances.

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Fragile balance. However, this competitive balance between the camps could change if Donald Trump, a supporter of deterrence with Russia and China, returns to the White House in the presidential election on November 5, as he will abstain from some of the decisions made. Current Republican members of Congress are already trying to cut back to the bare minimum, especially when it comes to financial aid to Ukraine by Joe Biden over the past four years. Similarly, if elections to the European Parliament make an agreement of the populace and social democrats on recent mandates impossible, support for Kyiv will plummet, especially if Europhobic and Moscow-friendly parties achieve a decisive representation, majority. It is also important to examine Narendra Modi's leadership. The political fate of the only emerging economy capable of overshadowing China will determine the level of investment by many multinationals in this part of Asia.

Rules for Artificial Intelligence. After all, cooperation will continue to be necessary to address certain challenges that affect all economies equally, such as climate policy, population flows or regulating artificial intelligence. The EU wants to maintain the same influence in these regions as it has so far exercised in multilateral governance, lest the axis of the world economy turn firmly towards the Pacific.

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