Emerging markets brace for wave of elections in 2024

AFRICAN BUSINESS AND ECONOMYJanuary 6, 2024 at 6:13 PM UTC

Emerging markets are anticipating their most significant election year in decades, with investors closely monitoring fiscal discipline and potential populist shifts that may impact markets and introduce uncertainty to key economies.

In 2024, countries representing over half of the global population and contributing more than 60% to the global economic output are scheduled for elections. That includes 16 African countries. The election year begins with crucial votes in Taiwan in January, carrying geopolitical significance, and concludes with elections in Ghana in December, where the country is grappling with a sovereign debt crisis.

David Lubin, an associate fellow at Chatham House and former head of emerging market economics at Citi, describes this election year as unprecedented and highlights recent surprises in elections, such as those in Argentina and Poland. The outcomes of these elections could have profound implications for the economic landscape of emerging markets.

Key Takeaways

The surge in global borrowing rates sets the stage for elections in emerging markets, adding pressure to more vulnerable economies. Despite the expectation of interest rate cuts from major central banks worldwide, the heightened borrowing costs pose challenges for economies facing fragility. Investors categorize elections into three groups based on the level of certainty in the outcomes: countries where the outcome is relatively clear, as in the cases of Russia or Venezuela; elections with apparent outcomes but contested ballots, exemplified by countries like India, Mexico, or Indonesia; and elections with genuine uncertainty, as seen in the case of South Africa. The differing levels of certainty contribute to varying degrees of market impact, with potentially significant implications for emerging markets.

Elections

Emerging Markets

Africa

Frontier Markets

Ghana