How elections can impact your business

2024 is the biggest election year in history. According to a report from The Economist, more than half the world’s population in 76 countries will go to the polls. It is unclear how many elections are fully fair and free, but their impact on businesses is certain.

Companies and entrepreneurs need to be aware of policy changes and adapt swiftly to stay afloat.

Here are some ways elections can affect businesses:

Changes to regulatory frameworks

Elections can lead to changes in regulatory frameworks. As the new government enact new laws, businesses may need to adjust to stay compliant.

This could require changes in operations, investments, and many other areas.

For instance, after Donald Trump’s victory in the 2016 US presidential election. His new administration pursued significant tax reforms with the new Tax Cuts and Jobs Act in 2017. The corporate tax rate changes had immediate implications for businesses in terms of profitability, investment decisions, and financial planning.

Donald Trump won the US presidential election in 2016

Adjustments to government contracts

A newly formed government may have different budgetary priorities, ideologies, or political agendas from the old one. This could lead to changes in government contracts initiated by the previous administration. As a result, businesses with existing contracts would be affected.  

In one notable example, after the 2018 general elections in Malaysia, the new government initiated a series of investigations into alleged corruption and financial mismanagement by the previous administration. The investigations revealed instances where contracts were potentially awarded under questionable circumstances.

Consequentially, several government contracts awarded by the previous administration were cancelled. These abrupt changes disrupted businesses involved in these projects, causing distress and, in some cases, financial losses.

Uncertainties in trade

Shifts in leadership may impact diplomatic relations between countries, leading to changes in trade relations, tariffs, and other policies.

In the case of Taiwan, the island’s elections outcome will have an impact on the delicate trilateral relationship between Taiwan, the United States and mainland China, which could spread to the business world via changes in trade relations.

Given the stakes, in the event of a rise in geopolitical risk, global businesses and investors will need to make difficult choices. More often than not, these choices need to be made pre-emptively.

Taiwan presidential election will be held on 13 January 2024

Fluctuations in stock price

As investors speculate on changes to policies after elections, the stock market could also be impacted.

For example, leading up to the U.S. presidential election of 2016, many investors anticipated that Trump’s victory could result in tax cuts, deregulation, and infrastructure spending. When Trump won the election, there was an initial surge in the stock prices, with the Dow Jones Industrial Average reaching record highs.

Stock prices have a direct impact on market valuations of public companies, prompting them to make changes if necessary. It will also affect retail investors, who may adjust their investment and spending habits, which in turn impact other businesses.

Getting your business ready for 2024

No matter which industry you operate in, your business will be affected by policy changes either directly or through a trickle-down effect. Even though elections bring about uncertainties and risks, there could also be opportunities for growth.

It is crucial for businesses to be aware of and adapt to new policies changes as a result of elections. If you feel uncertain during this elections, Healy Consultants is here to help. 

As a leading global corporate service provider, we are dedicated to supporting our multinational clients at every step. For more insights or personalized advice on operating and establishing your business, feel free to reach out to us.

Healy Consultants Group provides a wide range of corporate services across the world. Email or WhatsApp us now to find out more about our services.

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