Volatility as the norm

The world economy is going through a phase of serious instabilities and we are used to get new disturbing development somewhere in the world every day. Markets and currencies are swinging to the tunes of negative news and though they often make a comeback next day.  Sometime we may feel that nobody has control of anything in this new era of uncertainty.

The year 2016 has started with a big bang from the perspective of market fluctuations. As wel all know, there are several factors that carried over from 2015 which may keep markets on its toe in 2016 as well.

The leading factor is China’s new appearance. How world can absorb a moderately growing China?

How emerging markets remain steady amidst volatile capital flows and steep fall in commodity prices?

Again can the conspicuous spenders of the Middle East mange the reduced income from crude price fall?

There are such prime questions as well as several other small questions that various stakeholders of the world economy should answer and address in the coming months. Even a small shock can be amplified by financial markets across the world. So volatility will continue to shape our march throughout 2016.

It is not to be underestimated that though the present despair is out of the deepening recession, still some countries have structural problems as well. For example Brazil has to steady its economy to keep the credibility of the emerging markets.

In this context, some countries like India with slow and steady progress will stand tall in this era of volatility. What determines the ultimate outcome is not the volatile global economy; rather it is how we are built in macroeconomic terms to live with volatility.