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Hyper-volatility could be here to stay

It is said that “When nothing is sure, everything is possible”. The events of the last few weeks are a reflection of that.

The world’s nemesis is no longer COVID; it’s now global inflation which is creating turmoil across continents. The stand-off between Russia and the Western World over Ukraine has only added fuel to the fire. Since the restarting of economies, demand for natural gas - and the skewed generation/distribution thereof - has not only challenged industries but has also impacted daily lives with the high costs of consumables and their supply challenges. Boom-and-bust cycles are witnessed in unprecedented short periods. This possibly indicates that dealing with hyper-volatility is going to be a highly integral part of business in times to come. The tightness of the labour market in North America is a classic example of how fast situations change. Europe remains a mix of acceleration and deceleration, depending upon the country. Citing inadequate logistical infrastructure and equipment availability, the container shipping industry has continued to keep global foreign trade on a wing and a prayer. Furthermore, the last 12 months have also seen a surge in climate change-related natural disasters which have only intensified the chaos and uncertainty.

But despite all the pitfalls and challenges, the unshakeable truth is that the global economy has rebounded from the depths of mid-2020; the International Monetary Fund is projecting global GDP growth near to 5% in 2022. This truth also resonates in our industry as most companies saw better performance levels and profitability in 2021. From owlish to dovish, and now hawkish, central banks are adjusting their stance to bring economic stability. But commodity and stock markets keep finding newer reasons to keep gyrating, often outside the realms of fundamentals and rationality. C’est la vie!