Accounting & Finance

5 Events Shaping World Economics

Discover the hidden impact of significant events on the global economy. 

  • 6 min Read
  • January 27, 2024

Author

Escalon

Table of Contents

The global economy is governed by ever-changing policies, political shifts, and fluctuating market conditions. Innumerable pressing questions, trends, and events impact the state of the world economy. In the last few years, pivotal shifts and occurrences have shaken the global systems, shaping our lives.

Whether it’s the emergence of generative AI applications, rising debts, or slow economic growth, navigating these events is essential for proper risk management, sustainability, and development of the economy. 

Schedule a call today

In this article, we unveil and analyze the impact of some consequential events influencing the stability, adaptability, and evolution of the world economy.

Defining events that will impact the world economy in 2024.

1. Generative AI applications have become a movement


AI applications have taken the world by storm. One of the biggest technological trends, ChatGPT, has revolutionized how individuals and companies strategize and communicate. It has garnered ample attention and has become the heart of technological breakthroughs.

As innovative technical instruments, AI and other automation tools have been redefining the existing workforce and industry norms and will continue to do so in 2024. Although its use may increase productivity, it raises concerns about reskilling and job displacement. This poses a threat to the economic stability and inclusivity of different nations.

Key factors to remember: 

  • AI will impact about 60% of jobs in advanced economies. 
  • Emerging markets and low-income countries will experience about 40% and 26% AI exposure.

This will lead to one-half benefiting from increased productivity, while the other half will face potential displacement, leading to lower wages and reduced hiring.

2. Historical deal by COP28 to “transition away” from fossil fuels


An extraordinary yet historic agreement was made at the 28th UN Climate Change Conference (COP 28) in Dubai in December 2023. The attendees agreed to work to triple international renewable energy capacity by 2030 and safeguard our planet from rising temperatures. This was adopted to triple the global renewable energy capacity by 2030, protecting our planet from rising temperatures. The final agreement got clearance with the consensus of 200 members and is a crucial step to phasing out fossil fuel use in the energy system and reaching net zero emissions by 2050.

Key factors to remember: 

  • 200 members have agreed to reach net zero emissions by 2050. This will mean increased innovation, growth, and development in sustainable fuel sources. 
  • Additionally, it also opens up newer avenues to invest your funds in. 
Talk to us about how Escalon’s essential business services can help your firm scale faster.

3. Mounting debt crisis


The economic outlook for the global economy is not looking good in 2024.

According to the World Bank, debt servicing costs will increase by nearly 39% in 24 countries this year. 

Key factors to remember: 

  • Most indigent countries will struggle to repay their whopping $3.5 trillion debt. They could also default in the absence of any resolution mechanism. 
  • These markets, also called Frontier Markets, will have to repay nearly $200 billion of debt this year. 

This will force developing countries to choose between investing in infrastructure, education, public health, and servicing their public debts. 

Furthermore, any resolution to the debt crisis in 2024 will rely on key players like the World Bank, China, and the International Monetary Fund.

4. The Fed and other central banks cut interest rates


Sources claim that the US Fed will begin to cut interest rates in April 2024 due to the slower economy and the bugbear of inflation. 

The US economy experienced steady but slower growth, with a 5.2% expansion in the July–September quarter. This also happened to be the fastest pace since late 2021.

Key factors to remember: 

  • Inflation was closer to the Federal Reserve’s 2% target, standing at 3.1% at the end of November. 
  • Due to the anticipated economic conditions, experts expect at least three rate cuts in 2024. The monetary cycle will extend until the end of 2025. 
  • Estimates suggest the Federal Reserve could implement a reduction of nearly 2.5% in interest rates over the next 18–24 months.

These rate cuts can help improve the world economy, as consumption and spending will experience a boost owing to the easing of monetary policies. By seeing the positive indicators, other central banks might implement the same policy. Additionally, this will help businesses with easy tax filing and cash flow management, as fluctuating interest rates can complicate these processes.

5. Growth may be subdued in developing and developed economies


The growth of many developed economies may decelerate in 2024. The cause could be a weaker labor market, policy tightening, high-interest rates, and restrictions on consumer spending. The growth of advanced economies is expected to grow by about 1.4% in 2024. It’s a slight downfall from its estimated growth rate of 1.5% in 2023. The only plus is that inflation is expected to come down as supply chain issues finally come under control after COVID-19. 

Key factors to remember: 

  • As a result of slow external demand and tighter financial conditions, the short-term growth prospects of developing countries can also decline.
  • Rising debt sustainability pressures and balance-of-payments risks adversely affect low-income and weak economies. Their growth is projected at around 4.0% in 2024. It’s a modest decline from 4.1% in 2022.
  • Due to tighter monetary policies aided by lower international commodity prices, global inflation is projected to decline steadily. It will experience a downfall from 6.9% in 2023 to nearly 5.8% in 2024. 

Core inflation is expected to fall more gradually. Meanwhile, inflation is not projected to return to the target until 2025.

The final word


Many factors, like interest rate hikes, technological advancements, and government policies, influence the international economy. However, seeking advice from financial advisors, adapting to evolving trends, and encouraging inclusive policies and innovation can lead to a resilient and sustainable tomorrow.

Schedule a call today

Want to learn more about market trends to help your startup and small business? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, bookkeeping, taxes, HR, payroll, insurance, and recruiting — and we can help yours, too. Talk to an expert today.

This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Private Equity

Optimizing Operations for Long-Term Value Creation

Private equity (PE) firms have always been driven by the goal of delivering strong returns, but today’s market landscape demands...

Read More
Taxes

Navigating Nonprofit Tax Exemptions: Escalon’s Guide to Staying Compliant

Nonprofits are a cornerstone of communities, addressing critical needs, fostering growth, and making a meaningful difference. But with great impact...

Read More
Taxes

Your SMB’s Compliance Calendar: Key Deadlines You Can’t Miss in 2025 

Running a small or midsize business comes with enough challenges – compliance shouldn’t be one of them. Staying ahead of...

Read More
Accounting & Finance

Cash Flow Strategies for Life Sciences Companies: How to Stay Liquid in a Capital-Intensive Industry

In the fast-paced world of life sciences, innovation is king. But staying ahead of the curve often comes with hefty...

Read More
Accounting & Finance

CFO vs Controller: How Startups Can Benefit from Both

CFO vs Controller: How Startups Can Benefit from Both  As companies grow, managing finances and accounting becomes increasingly important. A...

Read More
Small Businesses

The ROI of Outsourcing Business Services: How to Measure Your Investment’s Impact 

The ROI of Outsourcing Business Services: How to Measure Your Investment’s Impact  In a world where every dollar must count,...

Read More
People Management & HR

2025 Employment Law Updates: What to Know

As we step into 2025, businesses across the country face several important updates in labor laws and employee benefits. Staying...

Read More
Startups

5 Signs Your Startup Needs an Outsourced CFO  

5 Signs Your Startup Needs an Outsourced CFO   Startups often operate with lean teams, but as they grow, financial complexity...

Read More
Leadership & Growth

CG Startups: How to Keep Costs Low While Scaling Operations 

Consumer Goods Startups: How to Keep Costs Low While Scaling Operations  Scaling a consumer goods startup requires a careful balancing...

Read More