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Good-Bye 2021 – Hello 2022

Well, that’s 2021 done and dusted…. Out with the old! In with the new! Welcome ‘22.

It has been truly epic on many levels. We’ve seen change, disruption, uncertainty, furloughs, subsidies galore in a number of countries, mass-vaccination programs and ongoing supply shocks.

Inflation has also reared its ugly head in most countries as food and energy price hikes have hit hard on household budgets.

Green Innovation and more…

In spite of all of the above, on a more positive note, we have seen a Green awakening in many countries.

Innovation is on the go, the fruits and impacts of which are surely to be felt over the coming years. Artificial Intelligence, Robotics, 3D-Printing, Genome Sequencing, 5G, Blockchain, Virtual/Augmented/Mixed Reality, Electric Vehicles, Energy Storage and Sustainable Waste Management (Check out this blogpost on The Convergence Tsunami) have been much in the media.

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COP26

Nations have been laying out their stall (even before 2021) for their vision of a green and more sustainable approach for future societies via the recent COP26 in Glasgow.

Biden’s Build Back Better

President Biden was inaugurated in January 2021 and came up with a number of plans to kick-start the US economy, especially the ‘Green’ economy.  However, his BBB Build Back Better program has met much resistance from the Republicans. Biden, in spite of winning both Congress and Senate, is having trouble passing his package. The US system has a tendency to cultivate and prioritise short-term goals. Barely just elected, all eyes are now on Mid-term elections. Let’s see how that pans out in 2022…

The European Green Deal

The European Green Deal for EU countries covers:

  • clean water, air, and soil
  • more energy-efficient buildings
  • healthier nutrition
  • cleaner energy
  • more public transport
  • re-skilling/up-skilling of populations
  • more modern industrial complexes
  • research and development
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Potential Flashpoints & Threats

There are one or two potential flash-points around the Globe with rising tensions.

The Ukraine is the scene of sabre-rattling between Russia and NATO. Russia is vehemently opposed to Ukraine’s entry into the NATO Alliance. The US is threatening to block Russia from using the SWIFT system for international transfers. Russia had already started to deploy its own equivalent system in 2019 – the SPFS. Deployment of the Russian Mir payment system had already started back in 2015 following sanctions from Western countries. This is the equivalent of Visa and Mastercard.

China’s Xi Jinping has been laying on the pressure for Taiwan’s re-integration into the People’s Republic of China.

The South China Sea has seen continual territorial disputes over the Spratly Islands, Paracel Islands, the Scarborough Shoal and the Gulf of Tonkin : The People’s Republic of China on one side, Vietnam, The Philippines, Japan, Brunei, Malaysia on the other.

To counter Chinese territorial ambitions, several alliances have been put into place:

  • the new AUKUS alliance (Australia, UK and the US) was born, although relations between France and Australia & the US were strained as a result.
  • the QUAD alliance between the US, Australia, Japan and India has also been revived
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One of the biggest threats cited by governments and non-governmental organisations are cyber attacks. The 2021 Colonial Pipeline Cyber Attack in the US was spectacular, causing chaos in energy infrastructure, disrupting gasoline supplies all along the Eastern Seaboard. The attack revealed the vulnerabilities of utilities, government entities and companies alike. With this raised awareness, there is likely to be massive investment into improving IT security.

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New Governments and Upcoming Elections

Angela Merkel has been a highly-respected figure on the international scene for over 20 years. She recently stepped down as leader. The last few years have seen the rise in popularity of the German Right Wing party AfD (Alternative für Deutschland. The recent victory of the Green Party will be an interesting evolution to watch. More so, as in recent years, the Germans have been battling with the dilemma of Nuclear Energy versus Green Energy. For the moment, the chosen path to a greener approach over the last few years is being closely scrutinised by the World:

  • The decommissioning of 26 Nuclear power stations has already started, with 6 still remaining.  
  • Coal Power stations have had to re-opened to make up for the deficit in energy production. A gradual phasing out of Coal-fired plants is planned by 2038

Chile has seen the arrival of a new Left-Wing President Gabriel Boric come to power. He has been calling for more Green Economy & greater equality. Chileans will have more say on how the immense wealth of natural resources is to be distributed between mining companies and the Chilean people.

Upcoming Elections

Strategic elections are coming up in a number of countries. In some cases, these are likely to have an impact on geopolitics: Australia, The Philippines, Brazil, The Lebanon, South Korea, France, and the US Mid-Terms.

France is about to take the helm of the EU under the French President Macron. France, Finland, the Czech Republic and a group of other Eastern European countries have combined in a push to have Nuclear Energy accepted as a Green Energy. This is also an initiative by Europe to reduce reliance upon Russian Energy supply, which has increased over the last decade.

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Mother Nature

2021 brought its fair share of brutal reminders that Mother Nature is untameable:

  • February saw massive snowstorms in the US and power outages in Texas due to extreme cold.
  • Cyclone Tauktae devastated the Indian state of Gujarat in May
  • The North America Pacific-side witnessed unprecedented numbers of ferocious fires in June and July
  • Deadly floods in Northern Europe caused a dozen deaths in Belgium and over 200 in Germany.
  • August saw a powerful earthquake in Haiti and also Hurricane Ida hit the Southern US states.
  • Floods and landslides hit China. Different parts of China were hit by extremes: floods and landslides, and even drought.
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Monetary, Finance, Stock Markets, and more…

Stock markets around the world have rallied throughout 2021, although December saw a correction.

Generally speaking, Big Tech companies have fared well during Covid. Here is the list of companies with market capitalisations measured in Trillions of US Dollars as of the end of 2021: .

  1. Apple $2.91 T
  2. Microsoft $2.53T
  3. Alphabet $1.92T
  4. Saudi Aramco $1.89T
  5. Amazon $1.58T
  6. Facebook $1.07T

Just as a comparison to these enormous figures, here are a few ‘projected‘ Nominal GDP figures for 2021:

  1. USA $22.9T
  2. China $16.8T
  3. Japan $5.1T
  4. Germany $4.2T
  5. UK $3.1T
  6. India $2.9T
  7. France $2.9T
  8. Italy $2.1T
  9. Canada $2.0T
  10. S.Korea $1.8T

Contenders to become Trillion-dollar market capitalisations in 2022 are currently Tesla $617 Billion, Berkshire Hathaway (Warren Buffett) $646 Bn, Taiwan Semiconductor Manufacturing Industry $617 Bn, and China-based Tencent $609 Bn.

Quantitative Easing or Tightening…?

The US Federal Reserve intends reducing the rate at which it has been carrying out Quantitive Easing. It has also announced a controlled increase in rates for 2022.

The Swedish government brought out its own CBDC Central Bank Digital Currency : the e-Krona.

China had already started deployment of its own CBDC and is looking forward to “showing this off” to the world as tourists flock to the Beijing 2022 Olympics.

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Supply Chains under immense strain

Supply Chains were already in difficulty in 2020. In 2021, the situation worsened with shortages throughout the chain:

  • Lack of drivers: many falling ill due to Covid or simply leaving the profession due to shortfalls in income
  • lack of empty freight containers
  • containers in the wrong place at the wrong time
  • lack of available trucks
  • lack of packaging
  • lack of freight ships
  • certain production lines either came to a halt or continued on a go-slow whilst awaiting missing parts
  • bidding wars between industrial companies to commandeer freight ships caused massive freight price-hikes
  • lack of personnel in certain ports
  • China’s Zero-Tolerance to Covid has resulted in certain major ports  being simply shut down. In spite of this knee-jerk reaction, it’s important to note that the Beijing Winter Olympics are due to start in February 2022.

Certain companies, in spite of having their activities close to their respective consumer markets, have found themselves unable to bring out a “finished product” due to lack of packaging (paper, plastic, cardboard). Unfortunately, much of this packaging is manufactured in China and S.E. Asia.

Supply Chain problems are likely to get worse in 2022 before they can get better.

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Electricity Outages and an ongoing scarcity of Semiconductors

Electricity outages were experienced in China as a result of climatic conditions  – floods destroyed crops and even drought caused insufficient levels for dam turbines to function. This resulted in the closing down of non-essential factories and commercial activities. This has only exacerbated Supply Chain problems, especially the supply of “transformed silicon” into the basic ingredient for semiconductors. It’s interesting to note that more than 50% of world semiconductors are manufactured in Taiwan.

Semiconductor companies have so far experienced a triple whammy over a two-year period: existing supply problems even prior to Covid, ongoing Covid-related Supply Chain problems, lack of transformed silicon. This in turn has created major difficulties for telecoms’ 5G deployment , computer-, smartphone,- electronic goods-producers to deliver finished products to consumers.

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Green is the keyword for 2022. Certain companies are taking Sustainable Development and Waste Management to heart and are re-thinking existing traditional approaches:

The company Softwear Automation is using Artificial Intelligence, Robotics, and Textiles (Sew-bots) & 3D-Printing. This avoids waste, as T-shirts can be tailor-made to the exact dimensions of the consumer. To create a circular economy, the “worn-out” T-shirts are then returned to the company and recycled.

TomBag manufacture re-usable bin-liners out of crushed plastic, thus avoiding the use of traditional plastic bin-liners.

Food wastage is thought to represent USD 1 Trillion each year. As populations increase, there is more and more pressure to grow greater quantities of food. People’s attitudes to consumption are likely to be questioned in the coming years. There is a need for people to become more aware of environmental impacts of growing and above all, wasting food.

Space Travel came to the forefront when the world witnessed the race to space between Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic.

Hybrid work will continue as the pandemic continues to make its way around the world in successive waves.

The Great Resignation

The Great Resignation has seen a number of Millenials in Western countries resign en masse. This is likely to continue throughout 2022. Growing numbers are becoming despondent with the cards they have been dealt with in life: Student debt; fewer prospects to earn decent salaries; difficulty in becoming a property owner; no prospects of pensions; unsuitable work ethics; and a desire to work on their own terms as more of them adopt a more entrepreneurial approach to work. The phenomenon is being watched closely by governments and demographers, as this could have an impact on pensions over the next 25-30 years as Millenials contribute less and eventually start to retire.

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The Metaverse…

Blockchain stole much of the limelight in 2021, even though mass adoption is not quite here (consult this overview of the Impacts of Blockchain). Buzzwords for 2021 were:

DeFi or decentralised finance disrupting traditional financial services (banking, loans, yields….)

NFT (Non-Fungible Tokens) covering the realm of digital art, royalties, and intellectual property.

More recently, the ‘Metaverse’ has hit the media big time. The Metaverse is the merging of the Physical World with the Digital World. This finds obvious applications in video gaming, leisure, social media, virtual visits, virtual working environments.

You can sense the bright future ahead for the Metaverse when a company such as Facebook recently renamed its holding company to Meta. In 2020, the market value of companies involved in the Metaverse was thought to be worth almost USD 22 Billion. This market is likely to explode over the coming years as major companies rush in to fight for market share. Epic Games, Roblox, Nvidia, Unity Technologies, Tencent Holdings, Apple, Meta, Google are amongst the big players.

The Winds Of Change…

2022 will indeed be an interesting year. The winds of change are on the way.


Sources:

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A European Green Deal. (2019, October 12). European Commission – European Commission. https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

Bloomberg – How China Plans To Become Carbon-Neutral by 2060. (2021, October 26). Bloomberg. https://www.bloomberg.com/tosv2.html?vid=&uuid=ed32146e-6b4f-11ec-b595-784946475179&url=L25ld3MvYXJ0aWNsZXMvMjAyMS0wOC0xMC9ob3ctY2hpbmEtcGxhbnMtdG8tYmVjb21lLWNhcmJvbi1uZXV0cmFsLWJ5LTIwNjAtcXVpY2t0YWtl

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Future, M. R. (2021, December 14). Metaverse Market Worth USD 21.91 Billion In 2020 and is Predicted to Grow at 41.7% CAGR by 2030 – Report by Market Research Future (MRFR). GlobeNewswire News Room. https://www.globenewswire.com/news-release/2021/12/14/2351695/0/en/Metaverse-Market-Worth-USD-21-91-Billion-In-2020-and-is-Predicted-to-Grow-at-41-7-CAGR-by-2030-Report-by-Market-Research-Future-MRFR.html#:%7E:text=filingsmedia%20partners-,Metaverse%20Market%20Worth%20USD%2021.91%20Billion%20In%202020%20and%20is,by%20Market%20Research%20Future%20(MRFR)

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