AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- China is a significant exporter of cotton, and because of its restricted supply from pandemic and labour-oriented reasons, clothing is getting expensive.
- Due to the Russia and Ukraine crisis, the price level for wheat, corn, and oil are skyrocketing as Russia, and to an extent, Ukraine is a significant exporter of these commodities.
- The demand for electric cars is rising in the west; however, a few days back, Tesla announced that the sales could be hurt due to obstacles in the supply chain.
- The airspace closure ensuing talks between Russia, UK and USA has further expounded the global supply-chain woes.
As the much-awaited recovery period entered the world economy in 2022, when global vaccination had reached an optimum stage and overall demand had lifted, prices shot high because of restricted supply. The pandemic took a heavy toll on the world supply chain because of stringent lockdown restrictions across the globe. However, as Covid-19 cases started settling down, people became hopeful that the supply chain barriers would soothe.
But is the world really in a state when the global supply chain woes would end? Let’s decode!
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Apart from the pandemic, geopolitical issues have joined the rally behind supply chain woes.
The International Monetary Fund had earlier stated that the world economy would grow at 4.9% in 2022; however, a few days back, the organisation downgraded their forecast to 4.4% and supply chain woes are one of the main factors for this downgrade.
The global supply chain market has been hindered because of the restricted supply of raw materials and essentials due to strict Covid-19 rules. In many countries, the restrictions have settled down; however, port closure is a big obstacle in a fluent supply chain in countries like China.
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Source: © Florinseitan | Megapixl.com
China is a significant exporter of cotton, and because of its restricted supply from pandemic and labour-oriented reasons, clothing is getting expensive. Additionally, because of the recent Russia and Ukraine crisis, the price level for wheat, corn, and oil are skyrocketing as Russia, and to an extent, Ukraine is a significant exporter of these commodities.
Additionally, Ukraine also exports essential gases needed for chips, especially the USA. Thus, a hindrance in the same would cause shortages for semiconductors required for home appliances manufacturing. The demand for electric cars is rising in the west; however, a few days back, Tesla announced that the sales could be hurt due to obstacles in the supply chain.
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As Russia invaded Ukraine and the talks between Russia and Western allies didn’t reach a peaceful resolution, the airspace closure followed by the talks between Russia, UK and USA has further expounded the global supply-chain woes. Now, flights between Europe and North Asia are most affected. Unfortunately, the airlines that are responsible for moving around 20% of the world’s air cargo are facing difficulties because of airspace closure.
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Just like it could take months to restore to the old normal life, people wonder if reviving the old supply-chain networks would be equally difficult. Several economists have said that the supply chain wouldn’t get fluent in 2022. It would take better investment, refashioned incentives, technological innovation and most importantly, world peace for the supply chain woes to end soon.
