This is to warmly welcome us all to the New Year – 2022! I pray that this year will exceed our expectations in every dimension.
As we start navigating our way through the year, we will be looking at some things to expect and how they may impact our finances.
- Inflation: Globally, economists believe that inflation and rising prices (especially of food items in the developing world) will still be an issue in many parts of the world.
In the US in particular, the FED has already signaled its intention to raise interest rates and ease back its bond-buying programme all in a bid to address the impact of inflation. The country has witnessed the highest inflationary rate in 4 decades in November and as you can imagine, consumers are really feeling the pinch.
Even over here in Nigeria, food prices are still high even though prices seem to have stabilized in the face of declining inflation. Unfortunately, Nigerian households do not seem to have any respite insight in the face of the removal of fuel subsidy and the expected introduction of additional taxation.
The implication locally is that there will be more pressure on household income which in turn will shrink disposable income. This is expected to impact most manufacturers negatively as demand for their products should shrink. For example, it was reported last month that pasta products were disappearing from many homes in the face of increased prices.
For those with foreign shares in their portfolio, increased interest rates may dampen corporate earnings which should affect share prices.
- Digital Technology: The impact of blockchain technology is expected to continue if not gain steam given the growing interest in metaverse and the opportunities it affords both companies and consumers.
According to Morgan Stanley, “metaverse is a concept that includes the construction of an alternate universe where individuals can model their image to whatever they want to be and perform real-life tasks such as buying things, gaming with friends and other activities”
The metaverse can be described as another way of rebuilding social digital services such as gaming, social media, and video calls in a seamless way with real life.
Although metaverse is not a new concept, the change of name by Facebook helped in no small way to kindle interest in this concept. In fact, Nike recently partnered with a gaming company – Roblux to create Nikeland where it intends to sell its products to its virtual audience.
This growing interest has also proven good for Ethereum blockchain – which is the major crypto used in making transactions in the metaverse.
The implication is that there is a growing opportunity for investors – games, commerce, infrastructure, and even employment. Recently, a plot of land sold in metaverse for $2.1 million (almost N1.2 billion!)
- The COVID 19 Pandemic: Unfortunately, the world is still talking about this virus 3 years after it was first discovered. Medical experts believe that more variants may still emerge in the face of vaccine inequality as the latest case (Omicron) has shown.
The implication here is that the continued pandemic will have an adverse impact on global economic recovery, especially on countries that depend on trade/exportation, tourism, and labour migration.
For the Nigerian economy, a global slowdown will definitely affect the much-needed diaspora remittances.
We will all do well to remember that the Omicron variant of COVID 19 is very contagious though mild. Keep washing your hands, maintain social distancing, wear your face masks in public and if qualified to do so; please take your booster shots.
See you next week and once again, I wish us all a glorious 2022!