No surprises in a year of votes (yet)

We are just over a third of the way through a period that has been dubbed 'the ultimate election year’. So far it hasn’t been a year of election surprises.

The results in Pakistan were a surprise. Elsewhere it’s primarily been continuity or expected change, as we saw in Indonesia. The main election in the spotlight right now is India, and that is widely expected to result in continuity.

The first half of the year is marked off by the European Union parliamentary election in June, and of course the US Presidential election in November. 

The Financial Times had a great stat at the beginning of the year about electoral change. In the 50 most-populated democracies in the first decade of the 2000s, seated politicians won re-election 70 per cent of the time. Now they win just 30 per cent of the time.

It hasn't turned out like that in 2024. But even if we aren't being surprised like we used to be, there are still transfers of power. In Indonesia and the Philippines there are new Presidents, and in Europe there will be new sitting politicians. 

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Active

In this context it's important to recognise governments are, in general, more active in the economy than they have been in the past.

India President Narendra Modi has moved on infrastructure, among other policy developments. In the US, under President Joe Biden, manufacturing for the climate transition had been supercharged. There are other examples globally.

In many ways whether elections are surprises or not is the wrong question. Even an expected-for change in government is likely to mean substantive changes which will impact different sectors, firms or geographies differently – for better or worse.

While political change these days in general brings policy change, that is probably not what worries many. It’s the election of politicians that might be labelled as ‘populist’ that can prompt a bit more worry.

But we should differentiate between how populists make us feel, and what they mean for the economy. Populists often might be unusual in their messages or delivery, but they aren’t necessarily bad for the macro environment.

Indonesian President Rodrigo Duterte in the Philippines launched the Build, Build, Build program, which doubled infrastructure spending to nearly 5 per cent of GDP.

President Donald Trump was a break with tradition in his messages and delivery, but the stock market welcomed his election.

In reality, the areas of focus for these leaders are often immigration and trade. As long as they aren’t too forceful on either, economies can still do quite well. The UK might be an example of the downsides that can eventuate.

Perhaps there should be less worry about who is elected, and more focus on getting a result that has integrity and is broadly accepted. Provided that occurs, the economy will go on.

Richard Yetsenga is Group Chief Economist at ANZ