The risk map for 2024: the radar points to geopolitical tensions and central banks

The situation of Chinese real estate and inflation will also continue to be in the eye of the hurricane next year

Christine Lagarde
Christine Lagarde, president of the ECB, and Jerome Powell, president of the Federal Reserve.GETTY

The global economy has already settled into a dynamic that the International Monetary Fund (IMF) defines as “prone to shocks.” The world began the decade with a pandemic that completely froze almost all economic activity, followed by major disruption to distribution chains that lit the spark of inflation, and then the war in Ukraine ended up fanning the flames. This year the economy is expected to grow, but weakness will be the trend in regions such as the euro zone. The risk map is growing. Geopolitical tensions no longer come only from Moscow and Beijing, but also from Israel and the Red Sea, especially since the United States and the United Kingdom have launched air strikes against several cities controlled by the Houthi rebels in Yemen in recent days. In addition, rate increases can hit the economy more than necessary, and China’s real estate market still poses a threat to economic stability. This is the map of the main risks in 2024.

Geopolitical tensions

International institutions see the risks stemming from political crises almost as a kind of “new normal.” In 2022, the Ukraine war hit commodity and energy markets and sent prices soaring. The war in Gaza poses a new challenge. The main fear was another rise in the price of oil. According to the IMF, a 10% increase in crude oil prices would reduce global gross domestic product by about 0.2% and would increase inflation between 0.2 and 0.4%. For now, that has not happened. The other fear is the spread of new disruptions to trade, which practically stagnated last year.

The focus has now been placed on the instability in the Red Sea, through which 12% of world trade passes. Following the attacks by the Houthi militia from Yemen, most shipping companies have decided to change routes and divert their merchant ships towards the Cape of Good Hope, in southern Africa, to avoid bing hijhacked or suffering drone attacks by the Houthi rebel militia. The measure adds between 10 and 14 more days of travel, and therefore means delays and increases in the deliveries of goods and raw materials such as gas and oil, which in the past passed through the Red Sea and entered the Mediterranean through the Suez Canal.

Furthermore, 2024 will be a year of intense electoral activity. There is a chance that Donald Trump will return to the White House, which could alter the course of the economy. In addition, there are elections scheduled in the United Kingdom, India, and the European Parliament, where the strength of far-right populist parties will once again be tested. “Geopolitical conflicts are increasing, productivity in industry, culture, and politics has all but disappeared, and we are immersed in meaningless nonsense in a world that desperately needs solutions for clean water, flood protection, climate change, inequality, defence, cybersecurity, education, and infrastructure,” says Steen Jakobsen, Chief Investment Officer at Saxo Bank.

Interest rates

Central banks around the world had to raise interest rates abruptly and from practically zero. Financial institutions have since exercised extreme caution, as has the world of so-called shadow banking (non-bank lenders, such as pension funds, insurance companies, and even hedge funds). Even so, they have not been able to avoid episodes of instability, such as the one that put US authorities on edge last spring in the US, where regional banking, led by Silicon Valley Bank, shook the global financial world. “What we saw were early signs of weakness. And I think they should be taken seriously, more than [they were at the time],” former Bundesbank president Axel Weber said recently in Madrid.

Not only that, analysts believe that central banks could derail the so-called soft landing, especially in Europe, if the process of falling inflation is not accompanied by a coherent monetary policy. Or what amounts to the same thing, if rates are not lowered to adapt to the new reality. For now, the ECB has only signaled that it will not continue to raise the price of money, but it does not want to talk about declines.


Experts assume that inflation will continue to ease. Energy prices are continuing to decline, while food prices are moderating. However, the war against rising prices is a long way from over. Climate change has made extreme events such as droughts increasingly more frequent. And that threatens to make this type of increase in food prices structural, as is happening with olive oil, which has not yet reached its ceiling due to poor harvests. In turn, geopolitical tensions can once again amplify energy problems, although on that front the normalization of oil and electricity prices has been one of the positive points of 2023.

In Europe, the ECB is continuing to monitor domestic inflation variables. In her last appearance, the head of the European Central Bank, Christine Lagarde, referred to salary increases and business margins, but used Frankfurt’s usual caution. “We need to better understand what is happening there,” she said.


The Asian giant is no longer the most populous country in the world — India overtook it in April — but China is still the engine of global growth, although it is facing increasing difficulties. Analysts are especially concerned about the country’s real estate sector, whose valuations could remain inflated. Hence the problems being experienced by some of its real estate agencies, such as Evergrande and Country Garden. In addition, the shadow bank Zhongzhi recently declared itself insolvent with a hole of $64 billion, which once again set off alarm bells.

Beijing’s intervention to avoid a crisis is sufficient for now. The growth rate for 2023 will be around the 5% that had been proposed, but China and the end of its economic miracle have become a fixture on the lists of possible black swans (extremely negative events or occurrences that are difficult to predict) that can change the pace of the planet. No one can answer exactly when it will happen or the power of its impact, and perhaps that is one of the arguments that can most reassure the Chinese authorities: its entry into a phase of turbulence has been predicted for years, but such a descent into hell doesn’t just happen.

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