9 forces reshaping the global business landscape and ways to stay ahead of the curve

As we enter 2024, many business leaders seek footing in a global landscape redefined by a half-decade of geopolitical tensions, economic instability, and a pandemic. The post-Cold War narrative of increasingly integrated economies, cultures and populations is growing faint. Instead, momentum is shifting to a growing multipolar world.

The symptoms are many. Relations between the West and Russia have turned hostile, and tension has grown between the United States and China. Major developing nations are pursuing increasingly independent paths. Old conflicts in the Middle East and Central Asia have erupted anew or threaten to escalate. Progress toward strengthening global trade and investment rules has broken down; even the United States and the European Union (EU) – the 20th century’s leading free trade champions – are adopting more nationalist approaches to supporting domestic strategic industries.

To navigate the increasingly complex global environment, global business leaders must adapt to the following nine forces reshaping global business:

The Russia-Ukraine frontline in the conflict has remained static in the last year. No cease-fire negotiations are in sight, especially with elections coming up in Russia and potentially Ukraine. There are signs of eroding support among foreign governments on both sides of the Atlantic for financial support for Ukraine. For Ukraine to join the EU, the bloc would have to provide €186 billion over seven years to support Ukraine, creating a significant burden for some member countries. Even without membership, reconstruction efforts are expected to cost around $1 trillion.

Since 7 October, tensions in the Middle East have been high, with global attention focused on the war in Gaza. Recent developments in Lebanon and the Red Sea have heightened concerns for broader regional conflict and disruption.

Even though inflation, triggered by the COVID-19 pandemic and the Ukraine war, is showing signs of cooling in the United States and EU, it’s uncertain when central bankers will significantly reduce rates. Recent high rates have raised hurdles for capital investments and reduced mergers and acquisitions, private equity and venture capital activity. On the positive side, interest rates remain modest in some nations. And unlike previously, higher US rates haven’t triggered systemic debt crises in emerging markets.

Geopolitical tensions, shifting government policies, a slowing economy and concerns over supply-chain resilience have complicated China’s business environment. Even assuming a slower growth rate of around 3%, however, China’s GDP in 2030 is projected to be around $5 trillion greater than in 2022. That would surpass the expected combined economic growth of the EU, the Association of Southeast Asian Nations (ASEAN), South Korea and Japan combined. However, Chinese markets have unique needs and regulations and fierce domestic competition. Companies need to consider carefully the role China will play in their portfolios.

Voters in nations accounting for more than half the world’s population will go to the polls to elect leaders this year. The impacts will be far-reaching. Results in Indonesia, for example, are likely to have implications for climate policies and results in Mexico may shape location decisions by foreign manufacturers. New leadership in the United States could result in major changes in foreign, economic and climate policy. Parliamentary elections in the EU could impact the bloc’s net-zero commitments. Moreover, developments in generative AI and other digital technologies could make elections acutely vulnerable to interference.

Asia, the most economically integrated region besides Europe, is well-positioned for growth in the coming years. Boston Consulting Group’s global trade model projects that over the coming decade, India’s and ASEAN’s trade will grow by 6.3% and 4.1% per year, compared with global trade growth of 2.8%. These trends result from growing domestic markets, shifting cost structures and a desire for increased supply chain resilience. Both markets are attractive investment locations for companies following a “China +1” approach of diversifying manufacturing footprints and supply chains beyond a China base.

The massive expansion in the capability and use of AI – for civilian and military purposes – is fueling a race for global supremacy. At the same time, different regulatory approaches are emerging around the world. For example, the EU, with its AI Act, prioritizes a centralized, risk-based approach covering consumer protection and product safety, while the United States is taking a more decentralized approach, focusing on national security. Navigating an increasing patchwork of AI regulations across borders will be challenging for global companies. They must engage regulators to ensure adequate safeguards while allowing experimentation and innovation.

Governments are taking increasingly bold action to develop low-carbon industries to fight climate change, strengthen domestic manufacturing and reduce reliance on offshore suppliers of components and critical minerals. There is significant money on the table. Through the Inflation Reduction Act, for example, the United States is investing $370 billion in clean energy and decarbonizing industries. The EU’s Green Deal Industrial Plan dedicates EUR 357 billion through 2030 to support the green transition with state funding and broader funding support for environmental targets on top of that, according to analysis from BCG’s Centre for Climate Policy. These policies are influencing company decisions. Because they often come with conditions attached, such policies will likely reshape global supply chains.

BRICS, initially a moniker for the high-growth markets Brazil, Russia, India, China and South Africa, has evolved into BRICS+, an organized grouping of emerging markets. In 2023, the grouping expanded to include Saudi Arabia, Egypt, the United Arab Emirates, Iran and Ethiopia. This expansion led to incremental increases in the share of global GDP and population. But it has dramatically increased the group’s weight in oil. BRICS+ countries now control 43% of global oil production, up from the 20% of the original group. BRICS+ also announced plans to establish institutions such as a new development bank.

It remains to be seen how a group of countries with some fundamental differences can remain unified. But if these institutions take shape and exert influence, they could offer an interesting counterbalance to the West.

Entrepreneurs, engineers and researchers are fast becoming new geo-strategic assets that fuel countries’ ambitions to reach AI leadership, shore up their tax base and drive green industrial policy. That’s why many nations are now playing a dual game regarding migration: they are trying to contain irregular migration movements while actively attracting top talent. Major reforms are underway in Australia, Germany and the Middle East. In 2024 and beyond, countries, cities and firms will need to articulate new narratives and develop new value propositions to attract and retain the citizens of tomorrow.

How can companies prepare to compete and win in this challenging and ever-evolving landscape? We see five key moves: