2024 Global Elections Report: The First Two Months
Democratic Erosion and Its Economic Implications
In 2024, over half the world’s population will go to the polls. As we enter the third month of the year, early contests are giving corporations a picture of how potentially destabilizing and complex elections could be throughout this year—especially as they occur at such a large, concurrent scale. Here, we explore why elections are particularly complicated this year and their implications for business.
- Power consolidation is eroding democratic mores in multiple countries. In some countries, democratic institutions are being challenged by popular leaders. With over 85% of votes, El Salvador’s Bukele received a mandate to extend to a third term prohibited by the constitution. Senegalese President Macky Sall succumbed to pressure to leave office as scheduled in April, after attempting to postpone the election 10 months. Bangladesh’s Hasina claimed victory in the name of the people. Policy and economic instability—especially affecting capital inflows —are likely to follow.
- Social unrest around elections disrupts business continuity and exports. Government repression is likely to generate the pushback that leads to instability economically and politically. In the short run, this negatively impacts the business environment. In the long run, it threatens the very export- and foreign investment-led growth that countries rely on. Pakistan, Bangladesh, Russia, and Senegal have already displayed political violence, riots, and the jailing of political opponents.
- Trust in government is falling. With the rise of disinformation and polarization, EGA continues to monitor the effects on trust across the globe. Contested elections and government repression are likely to further reduce trust in government. As large-scale elections continue to take place throughout 2024, businesses must reassess and consolidate their approach as providers of trust for populations across the globe.
Broader Focus: Two Months In…
Over 60 nations comprised of over 4 billion people have elections in 2024. Several high-profile cases from the first two months of the year increase existing concerns of democratic backsliding on a global scale.
WHat we have seen
Opposition members are being hit in multiple countries. Opposition leaders and members have been jailed and, in some cases, killed in Senegal, Pakistan, Russia, India, and Bangladesh. The opposition has been electorally marginalized in El Salvador, Bangladesh, and Belarus.
Information is being limited and weaponized. Media coverage was limited in Pakistan, and the internet was cut in both Senegal and Pakistan under security pretexts. In Bangladesh, even less-than-flattering voter turnout statistics appear unreliable. Censorship efforts plagued South Asia, and (dis)information campaigns on social media gained attention in El Salvador and in Indonesia. In Pakistan, an AI-generated video was used to rally supporters for now jailed former President Khan using old clips of him speaking.
Taiwan has been an outlier in its internationally recognized free and fair election. The Taiwanese election was remarkably balanced, with the incumbent party winning the presidency but the opposition gaining control of the legislature. Trust in electoral institutions remains high in Taiwan.
What we can expect
The increased political instability seen in these elections may have downstream effects on economic stability. Instability has a largely negative correlation with economic growth. We anticipate that governance challenges and uncertainty will emerge from protracted election outcomes, and potential domestic societal unrest in countries with major elections will have negative impacts on economic stability.
We expect relatively low pressure from the US and international community to enforce democratic processes. Lighter US and multilateral criticisms and lack of sanctions over election irregularities in early 2024 opens the door to irregularities in upcoming elections in different countries.
Election by Election Insights
Bangladesh, January 7
On January 7, Bangladeshi Prime Minister Sheikh Hasina won a fourth consecutive term in an election that witnessed violence, crackdowns on opposition parties, and a meager 40% voter turnout amidst an opposition boycott. The governing party won 222/300 parliamentary seats. The US Department of State concluded that the elections “were not free and fair.”
Significance:
- In the months leading up to the election, tens of thousands of protesters took to the streets, and dozens of public buses and a train were targets of arson. Observers note that there is a lack of separation of powers, increasing the likelihood that actors wishing to impact policy must act outside of government channels. For example, textile and garment industry workers recently held wage protests, signaling the industry’s dissatisfaction with the government. The industry is strategically important to Bangladesh and makes up a large segment of exports to the US.
Forecast:
- Hasina’s handling of the economy will be pivotal either in producing more discontent or in regaining legitimacy among disenchanted citizens. After years of growth, a now-sputtering economy has led to economic discontent. The US is a large trade partner for Bangladesh and, while the US expressed concerns about the election irregularities, US trade pressure or sanctions remain unlikely due to geopolitical compulsions. Sheikh Hasina's foreign minister visited India in early February and was assured of all diplomatic support by the Modi government. Word in India's diplomatic circles is that PM Modi had personally spoken to President Biden during his state visit in June 2023 and sought assurance that the US will not escalate matters with Sheikh Hasina’s government.
Business Impact:
- The textile and garment sector will be the one to watch, and any political and social instability following the election could impact exports and therefore growth. Any purported US sanctions would likely hit the sector, exacerbating economic dissatisfaction on the ground.
Taiwan, January 13
Taiwan’s highly anticipated elections were a victory for the incumbent’s party, the Democratic Progressive Party (DPP). Though the elections had been viewed as a referendum on the future of Taiwan’s relationship with China, the DPP was not handed a clear mandate, losing control of the legislature which will be led by a Kuomintang (KMT) speaker. Voters struck a balance. A high level of transparency in Taiwan’s election process—including paper ballots and hand counting—resulted in high levels of trust in the election outcome. China’s response to the elections was muted, though there has continued to be flare ups in cross-strait tensions, and there is little risk of escalation in the near term due to the political balance resulting from the elections. It will be important for businesses to watch developments, however, as Lai’s inauguration in May could see increased political rhetoric and activity from China. For more details, please see our full election coverage here:
Senegal, TBD
On February 3, President Macky Sall announced a 10-month delay to the general election originally scheduled for February 25. Legislators were forcibly removed from the chambers as they debated the decision, and protests broke out in multiple cities, which resulted in more than 150 arrests and 3 deaths. The government banned marches and cut internet and mobile data access. However, on February 15, the constitutional council overruled Sall, leaving the country at a standstill awaiting a new date. While President Sall is not seeking a third term and announced his intention to vacate office on April 2, his postponement of the election is largely seen as an attempt to buy more time for his chosen successor to gain ground to win, according to opposition leaders. On Monday, a national dialogue convened by President Sall delivered their recommendations, which included a proposal for a new election date of June 2 and next steps to restore trust between candidates and the public.
Significance:
- This delay in the presidential election is unprecedented in Senegal. Past attempts to hinder the democratic process have often been met with resistance, so continued demonstrations are likely. There are rising regional concerns as well, since Senegal was considered to be the most stable democracy in a region plagued by instability. Both the African Union and Economic Community of West African States (ECOWAS) called for the restoration of the electoral calendar.
Forecast:
- Ongoing political uncertainty is likely to shake investor and entrepreneurial confidence. Similar instability in 2023 caused losses of “tens of millions of dollars” and we may expect comparable impact at present. Electoral delays may impact Senegal’s planned fiscal consolidation, jeopardizing long-term growth. Political stability had been an economic asset to Senegal, and trade and investment ties between Senegal and the US have been steadily strengthening over the past decade. While the US Department of State is “particularly alarmed” by the events, it continues to engage diplomatically with Senegal.
Business Impact:
- Sectors of particular importance include tourism and travel, and oil and gas. Dakkar is an aviation and port hub vital to these sectors, and social disruptions in the city may have an outsized impact.
El Salvador, February 4
On February 4, despite the Salvadoran Constitution’s prohibition of two consecutive presidential terms, El Salvador’s incumbent President Nayib Bukele announced that he won more than 85% of the vote for a second term. Bukele has been accused of stacking the courts and concentrating power in his own hands, but his “iron fist” crackdown on organized crime in the country has won him great popularity.
Significance:
- The opposition in El Salvador has been “pulverized,” and it appears that Bukele expects his party to continue expanding his special powers. This heightens the risk of policy instability, particularly with regard to using anti-corruption policies to target his perceived opposition. Regionally, Bukele’s policies hold outsized sway, as they present a blueprint for Latin American countries to replicate his crimefighting strategies.
Forecast:
- The US is unlikely to change diplomatic tack on El Salvador, as the US “commends the work of electoral observers and looks forward to working with President-elect Bukele.” This placated response is unsurprising given Bukele’s cooperation on the US agenda to slow northbound migration. Bukele’s largely-unsuccessful institution of bitcoin as legal tender is an example of unilateral policy implementation, which heightens economic volatility risks. Both Bukele’s low-success economic policies and his popular but debt-inducing crimefighting policies may mean that if economic prospects do not improve in the country, the “honeymoon” phase of his reelection may be short-lived. Increased economic and security weakness in El Salvador can quickly translate into additional pressure on the US’ southern border.
Business Impact:
- The trade sector will continue to be crucial to El Salvador’s economy, underpinned by vital exports such as textiles, sugarcane, and coffee. Any foreign exchange policy instability or economy-wide volatility may be especially felt in these sectors.
Pakistan, February 8
On February 7, one day before the general election, two bomb explosions near candidates’ offices in the Balochistan province killed at least 28 people. Both leading candidates are former prime ministers, and both are either jailed or exiled. Cell services were suspended for alleged security reasons. No clear winner had emerged after seven hours of vote counting, which led to a scramble for coalitions. The Pakistan Muslim League-Nawaz (PMLN) and the Pakistan People’s Party (PPP) announced a coalition government that excludes former President Khan. The military has often meddled in elections, but this crackdown on the Pakistan Tehreek-e-Insaf (PTI) was more visible, even pressuring the media to avoid covering the PTI. The military’s involvement reduced street protests in this election compared to previous elections.
Significance:
- The PMLN-PPP coalition emerging from the election may have difficulty developing and implementing its policies. Observers suggest that the election results have little impact on policy, saying that no leading party has a strong economic or security plan for Pakistan. However, the fragile nature of coalition governments inherently calls into question the mid- to long-term stability of any resulting government, which may further impact policy development and implementation. This comes at a time when Pakistan’s economy is in dire need of action in the face of high inflation, falling foreign exchange reserves, a depreciating currency, and low consumer confidence.
Forecast:
- Coalition building already reduces the governing power of any party. The Army has brought the two rivals together to form the national government. The Shehbaz Sharif-led government's survival is key for the military brass. Sharif proved a comfortable working majority in the National Assembly and it is likely that the Army will ensure the government is stable. All eyes are on whether PPP becomes part of the Cabinet, with the expectation they will at a later stage. The US has expressed concerns over the integrity of the election but, given the fact that Pakistan is a US ally in a critical region and that China has been courting Pakistan, the US is unlikely to risk alienating Pakistan through sanctions or other diplomatic pressures.
Business Impact:
- This election may impact US foreign direct investment in the country, which encompasses sectors like fast-moving consumer goods, information and communication technology, renewable energy, and health care services, including large brands like Pepsi-Cola, Coca-Cola, General Electric International, Wabtec, Procter and Gamble, Honeywell, Pfizer, Abbott Laboratories, and DuPont. However, notwithstanding the PTI's letter to the IMF, Pakistan will most likely clinch a fresh bailout package, since the interim government has met most targets set by the IMF. The new PM has already vowed to carry forward the reform agenda to ensure economic progress.
Indonesia, February 14
On February 14, Defense Minister and former general under the Suharto dictatorship Prabowo Subianto claimed victory in the general election. Unofficial results suggest Prabowo received around 60% of the votes, and he advised his supporters to calmly await official results (his supporters have rioted when he lost elections in the past). Observers warn that a Prabowo presidency could mean continuation of “corruption-tainted politics.” Prabowo’s running mate is the outgoing leader Joko Widodo’s son, raising concerns of nepotism and of Widodo’s efforts to build a political dynasty. Critics say Widodo co-opted Prabowo to retain influence over politics even after his second five-year term ends.
Significance:
- Indonesia is not only the world’s fourth most populous country, but it is also projected to become a top five economy by 2045. The country has experienced an average economic growth of 5% per year under Widodo. While non-aligned, Indonesia is strategically of interest to both the US and China, is an integral link in global supply chains, and is a top producer of coal, palm oil, and nickel. For these reasons, observers also highlight that Indonesia will be a major player in multilateral efforts to tackle the climate change crisis. As the largest economy of the Association of Southeast Asian Nations (ASEAN) bloc, Indonesia serves as its nominal “big brother,” and lends heft to the blocs’ strategic geopolitical role in the Asia-Pacific as a non-aligned counterweight between the US and China.
Forecast:
- A Prabowo presidency likely entails political and economic continuity amid democratic backsliding. The close links between the outgoing and incoming presidents lend confidence in a continuation of Widodo’s policies, leading to continued economic growth. Concerns include an increase in illiberal actions, considering Prabowo’s previous support for removing term limits or direct presidential elections. Increases in illiberal tendencies and in perceptions of corruption may reduce Indonesia’s ability to attract foreign investment in the longer-term. In the short term, Indonesia’s strategic centrality reduces the risk of foreign sanctions from Western democracies.
Business Impact:
- Indonesia’s expected economic and trade continuity will maintain a favorable environment for global trade, particularly in key exports of coal, palm oil, and nickel. Boosting foreign direct investment in infrastructure and the manufacturing sector remains a key priority. The government is expected to continue efforts to boost business friendliness, target corruption, and harmonize corporate tax systems.
Belarus, February 25
On February 25, Belarus held parliamentary and local elections in which the Belaya Rus party obtained 51/110 seats at the national level. The elections have been boycotted by the opposition with criticism that only regime loyalists were allowed to run, given multiple raids on dissidents in the lead-up to the election. These are the first elections since the “rigged” 2020 presidential elections, which sparked widespread protests and repression. The United States and the Organization for Security and Cooperation in Europe (OSCE) have condemned the present election as not free and fair.
Significance:
- The government increased repression ahead of the election, which reduced mobilization after the announced election results. Aleksandr Lukashenka—who has been president for the past 30 years and is running again next year—claimed that the election demonstrates support for his government. The lack of popular unrest this year contrasts with the protests in 2020, where upwards of 6,000 protesters were detained. Belarus’ main exports to the US and EU have included fertilizers, wood, and minerals and metals, although sanctions on Belarus after past elections and its support for Russia’s invasion of Ukraine have already impacted these sectors.
Forecast:
- Popular mobilization in Belarus may remain muted, but the risk of increased Western sanctions remains heightened. The US and EU both imposed sanctions on Belarus following what they claim was a fraudulent election in 2020 and have ratcheted up those sanctions on election anniversaries. Further sanctions following this election are likely but, as with past sanctions, their present impact may be diminished by strong Russian support for Lukashenka’s regime.
Business Impact:
- Opaque regulations and government pressure post-2020 is a challenge for businesses, given that Belarus’s economy is hardly market-based. Lukashenka’s increasingly repressive position may exacerbate this trend. Additional Western sanctions may further impact Belarusian exports.
What’s Next
Several elections will take place in the next few months. Some will be expectedly undemocratic, like Iran’s were on March 1 and Russia’s will be on March 17. However, other elections will take place in countries that are considered democratic but have heightened risks of backsliding. Elections in India (expected April-May) and in Mexico (June 2) are at particular risk of irregularities.
Again, we expect that Western countries seeking to enforce democratic processes will keep international-level criticisms or economic sanctions on the table, but may be less likely to level them against strategic partners—opening the door to further irregularities in upcoming elections.
South Africa (May 29) will also be one to watch, with the possibility of the ruling African National Congress losing its majority for the first time since Nelson Mandela led it to power 30 years ago in the fall of apartheid. And the United States is already deep into a tumultuous primary election season as we careen toward a 2020 rematch, after President Biden and former President Donald Trump dominated Super Tuesday (read EGA’s analysis in What We Learned from Super Tuesday here)—even as Trump is mired in legal battles and Biden faces questions on his fitness for office.
2024 is a monumental year for politics across the globe. With over 60 nations holding pivotal elections, the issues of polarization, trust, and misinformation continues to rise in importance. Edelman Global Advisory will continue to monitor the impact of trust on global elections and geopolitics.
