This year will likely be one of the most challenging for policymakers, and very volatile for financial markets. First, there are two major wars — Russia vs Ukraine and Israel vs Hamas — that continue to pose risks to global supply chains, energy markets, inflation resurgence and general geopolitical stability. Second, it is the global election year, given that more than 70 countries, including South Africa, the US, India and the UK, will head to the polls to elect leaders or governments. There are various implications for economic policy and how to respond to them.

Let’s begin with the financial markets risks that lie ahead. In many countries there is the possibility that elections can produce unexpected outcomes. In South Africa there are two possibilities with fat tail risks — an unstable coalition, or an outright majority for the ANC. Both can lead to wide swings in asset prices, significant sell-off in the case of potentially populist and unstable coalitions, or a signif...

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