While inflation rates dropped in many economies worldwide in 2024, the lingering effects of rising prices led to significant political consequences. Voters, frustrated by the steep increases in costs for essentials like food and energy over the past few years, expressed their discontent by punishing incumbent parties in elections across the globe.
In the United States, the inflation-driven discontent played a pivotal role in Donald Trump’s return to the presidency, four years after he was ousted from the White House amid claims of election fraud. Despite his supporters’ failed attempt to overturn the 2020 election results through the January 6 Capitol riot, they made their voices heard at the ballot box this year, leading to a new American leadership that may challenge democratic norms domestically and alter international relations.
New governments in several countries
The anti-incumbent sentiment fueled by inflation also resulted in new governments in several countries, including Britain, Botswana, Portugal, and Panama. In South Korea, voters shifted power to the opposition in parliament, providing a check on President Yoon Suk Yeol, who faced backlash after imposing martial law in early December—a move that was quickly reversed by the National Assembly. Elections in France, Germany, Japan, and India also saw significant political shifts.
In stark contrast, Russia remained unchanged as Vladimir Putin was re-elected president with a staggering 88% of the vote, marking a record in post-Soviet Russia. Moscow continued its military campaign against Ukraine, achieving notable territorial gains. The potential implications of Trump’s return to the White House on the Ukraine conflict remain uncertain, with many in Ukraine and Europe concerned that he may favor Putin and seek to solidify the current status quo.
In the Middle East, Israel’s military operations against Gaza expanded into Lebanon, leaving the Iran-backed Hezbollah weakened. Meanwhile, a coalition of rebel groups successfully overthrew Bashar al-Assad in Syria, now vying for control of the country.
On the business front, companies worldwide grappled with the challenges and opportunities presented by artificial intelligence. The influence of technology firms on the market is underscored by the fact that seven major tech companies, dubbed the “Magnificent Seven,” now account for over one-third of the S&P 500’s market capitalization.
Elon Musk, CEO of Tesla and a key figure among these tech giants, is also an adviser and financial supporter of President-elect Trump. This intersection of technological innovation and political power is poised to shape the landscape of 2025 and beyond.
