Rising costs and geopolitics prompt the global supply chain to strengthen robustness, industry veteran says
- Despite signs of improvement, the global economy is confronted with many uncertainties, including geopolitical tensions and rising costs.
- Supply chains worldwide are stepping up efforts to build resilience across multiple aspects, including diversifying product sourcing and intensifying the pursuit of innovation.
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The global economic picture shows resilience in 2024: in the first quarter of this year, major trade figures started reversing a downturn trend characterised by a slow pace of demand for manufactured goods.
Nevertheless, global trade has recovered with moderate intensity. According to the World Economic Outlook published by the International Monetary Fund, forecasts for the market in the United States indicate improvement. EY forecasts that the USA's real GDP growth will be 2.7 percent for 2024. However, the situation is much weaker for other advanced economies, particularly major European countries. The Vanguard Funds forecasts that the 2024 GDP growth of the European Union is 0.6 percent, and Germany, the largest economy in the region, has continued its contraction.
The supply chains have returned to growth mode, emerging from the serious disruptions caused by the pandemic. However, many manufacturers and exporters are struggling with rising costs. The cost inflation is attributed to many factors: material scarcity has increased, freight costs have risen, and ongoing regional wars have led to disruptions in container shipping, longer haul routes, and ocean freight bottlenecks. Unpredictability has become the norm: extreme weather events happen more often, and port workers' strikes have led to massive port congestion.
Against this backdrop are the rise of protectionism and the unpredictable nature of export-import regulations, emerging from the ongoing clash between two of the world's largest economies. Increased tariffs and sanctions continue to cast a shadow over the stability of global supply chains and commerce.
Diversification of production bases
