As we commence with the second half of 2015, we reflect on the past 6 months in which global uncertainty and volatility have remained the norm. Global growth has disappointed, especially, but not surprisingly in oil exporters and forecasts continue to be revised downwards.

There are large challenges, associated with two transitions that are currently confronting policy makers across the world, especially the emerging economies: the impact of the looming monetary tightening cycle in the United States, and the repercussions of low commodity prices.

The first U.S. monetary policy rate increase is expected to dampen capital flows to developing countries modestly and gradually. However, this will likely cause an increase in global borrowing cost, which will be accompanied by greater investor discrimination between countries based on their individual vulnerabilities and structural strengths.

The rapid appreciation of the U.S Dollar can partly be attributed to the widely expected tightening of monetary conditions in the United States, along with monetary expansion by other major central banks. Globally many currencies have weakened against the U.S. dollar, particularly those of countries with weak growth prospects or elevated vulnerabilities.

Despite some pickup in the first quarter of 2015, lower oil prices are having an increasingly pronounced impact. The benefits from low oil prices to growth in oil importers have thus far been slow to materialize, but some oil importers have seen their vulnerabilities decline due to slowing inflation and narrowing fiscal or current account deficits, boosting their growth potential. In oil-exporting countries, lower prices are sharply reducing activity and increasing fiscal, exchange rate, and/or inflationary pressures.

According to the World Bank, the global economy is expected to grow 2.8 percent in 2015, slightly less than forecast in January, before strengthening moderately to 3.2 percent in 2016–17. Developing country growth, buffeted by falling commodity prices, the stronger dollar, and tightening financial conditions, has been revised downward to 4.4 percent in 2015 but is expected to pick up momentum and reach 5.3 percent in 2016–17.

Risks remain tilted to the downside, with some pre-existing risks receding but new ones emerging. In particular, tighter global financial conditions could combine with deteriorating growth prospects, especially in commodity-exporting countries, to raise the possibility of greater financial stress. The strengthening dollar could also slow the U.S. economy more than expected earlier, leading to some global strain.

“Changes, which in the long-run steady-state, may be good for the global economy, can cause strain and even a slowdown in the short run brought about by the challenges of transition.” (The World Bank) In uncertain times, the use of a comprehensive plan and strategy for managing your financial affairs becomes vital.

We as wealth managers aim to remove the emotion from decisions and remain focused on the long-term plan for our clients.