Volatility pushes down GDP forecasts

By many metrics, the world is facing record levels of turmoil, both in terms of the global economy and the geopolitical landscape. This new world disorder reflects a wide variety of factors, leaving investors and business leaders wondering how best to hedge against so much uncertainty.

- Dambisa Moyo

Many factors are contributing to deteriorating GDP forecasts and greater volatility, including deglobalisation, now exacerbated by tariffs, heightened inflation risks and technological competition between the United States and China. Meanwhile, geopolitical uncertainty is growing as a result of widening regional fissures, the reconstitution of emerging-market trading blocs, such as the Brics+ grouping of major emerging economies, and ongoing hot wars. And social uncertainty — stemming from record levels of migration and displacement — is fuelling populism and distrust of government in many advanced economies.

Until recently, financial-market volatility had been high by historic standards, yet not as elevated as one might expect, implying some degree of market complacency. For example, the Vix, a measure of volatility — had been trading between 15 and 20 points in the opening weeks of 2025, compared to 12-14 during the same period a year earlier. Similarly, the Move (Merrill Lynch Option Volatility Estimate) — a measure of interest-rate volatility — had remained elevated at or close to 100 points since February 2022, up from 50-80 in the preceding years. Following Donald Trump's “Liberation Day” tariffs, however, the Vix surged above 40, and the Move above 130.