2022 has so far felt like a perfect storm for the global economy and financial markets. Changing monetary policy, decades-high inflation, the war in Ukraine and supply-chain disruptions, to name a few, have taken a toll on investor sentiment.
The combination of high inflation and slowing growth is a clear concern, with central bank rate increases in June signalling that we are moving into a new world order in markets. Both equities and bonds have corrected in the first half of 2022, which means that even well-diversified portfolios have taken a hit. But investors should not lose faith. In fact, they would be ill-advised to exit markets now.
In our Investment Outlook 2022 titled "The Great Transition", we forecast a deceleration of growth, higher inflation than before the pandemic, central bank rate hikes, more moderate financial market performance and generally a return of economic boom-and-bust cycles.
