Navigating Today’s Economy is the latest series streaming on The Ismaili TV. By featuring esteemed figures from the economic and financial sectors, it hopes to explore a range of current themes in an effort to get past complexity and offer clear, actionable insights.
The latest episode features Riaz Ahmed, president and CEO of TD Securities, and chairman of the Aga Khan Foundation Canada National Committee. In the show, Riaz responds to a number of questions about the current economic climate, and discusses topics of financial planning and prudence.
“Today we have a number of developments that are at play simultaneously,” says Riaz, when asked about the changes in the economy we’ve been hearing about over the past year.
He explains firstly that, with the world emerging from the Covid-19 pandemic, demand for products and services has grown rapidly, which has driven their prices upwards. Secondly, energy and commodity prices are rising, due to global geopolitical factors. At the same time, unemployment levels are low in the western world, which is causing average wages to increase.
“All of those factors are creating a situation which is feeding inflation upwards,” added Riaz, “and central banks are saying this is not good for the economy, generally.”
In response, central banks in many countries have begun to raise interest rates in an effort to bring down inflation — their established course of action in such situations. This has been the case in the USA, Canada, the UK, and the Eurozone, and is having different effects on different people in each of these regions.
“As usual in these cases, there are positive factors and negative factors to be considered depending on the circumstances an individual finds themselves in.”
In parts of the western world, there’s a strong probability that interest rate rises will cause growth to slow, which could in turn lead to sustained negative growth, also known as a recession. While there’s plenty of debate around whether or not a recession might occur this year — and if so, how severe it might be — nobody knows for sure.
“The important thing is to be ready for any particular scenario that might arise,” suggests Riaz.
This includes having access to savings or financial support to “get to the other side of the valley,” to reduce spending by selecting more affordable products when shopping for essentials, to consider paying back mortgages or debts over a longer period, and to perhaps decide to live in cities and towns that might be cheaper. Each family’s circumstance is different, so will require a different response.
“There’s no silver bullet,” explains Riaz. “When painful times arise, everybody has to make thoughtful decisions that are right for them.”
Aside from the technical components of budgeting and planning, equally important are the emotional and psychological aspects, which are generally less understood and less frequently spoken about.
In light of these, Riaz advises living with caution and reigning back spending where appropriate, not only as an act of prudence for oneself, but also as a considerate member of the community to avoid putting undue pressure on others.
“To me, the most important thing as a Jamat is for us to think about how we can be ready should a deeper stress come, that we emerge stronger, more united, and that every individual thinks through how they can support the Jamat should we head into a deep stress; but more importantly, if you are the one that needs support, how do you go ask for it and how do you seek that support, because that is the hardest thing to do.”
In the episode, Riaz discusses matters to be considered for those buying their first home or needing to renew a mortgage, those who have debts to repay, and those who may have savings to invest. He also shares tips for business owners, and those looking for a job or their next career step.
To watch the show in full, and learn how to better navigate today’s economy, visit The Ismaili TV On Demand.