2022 has been a wild year for financial markets:
- Surging inflation prompted central banks across the globe to deliver unprecedented rate hikes. With the exception of just a handful of central banks, policymakers turned super hawkish last year to prevent runaway inflation from taking hold.
- Following a spectacular year for the USD, in which it appreciated to two-decade highs due to Fed rate hikes, Europe’s energy crisis, the Russia-Ukraine war, and China’s lockdown persistence, the tides appear to be turning against it.
- In a world where higher interest rates, buoyant inflation, and rising tax burdens are knocking the wind out of global growth sails, China’s potential slowdown is another major headwind to navigate.
- There are many indications that the world economy is already on the verge of a recession.
During the webinar, we discussed some of the major events of 2022, and the impact it had on markets worldwide:
- 2022 Russian invasion of Ukraine, lead to a shock in oil prices, pushing Brent crude above $120 per barrel.
- The war led to an energy crisis and rising prices in the EU. In South Africa, the unabated Eskom crisis is crippling the economy.
- Central bankers tried to bring back inflation with unprecedented hikes in interest rates.
- Massive printing of money in 2020/21 led to inflation spiralling out of control in 2022.
We also dissected the biggest themes of 2023:
- Rising interest rates to slow inflation ultimately have knock-on effects, recessions globally are likely.
- The rising dollar and much higher interest rates, which are likely to persist can cause a sovereign debt crisis, especially in emerging markets.
- China has had a zero-Covid policy all along and for that reason China’s growth has been slow, keeping supply chains under pressure, but China is slowly re-opening.