The Economic Consequences of Disrupted Global Supply Chains
For nearly three decades, global supply chains were the quiet engines of economic globalization. From 1990 to 2008, they drove the rapid expansion of trade, accounting for 60-70% of its growth. More than a decade later, however, they have stalled – and may in some areas be going into reverse.
The COVID-19 pandemic has caused a supply-shock recession. The related uncertainty may slow the expansion of global value chains by at least 35%. Indeed, world trade is no longer expanding faster than world GDP. If this continues, companies will reshore manufacturing from Asia and elsewhere.
Dalia, Project Syndicate, has written an article outlining the economic consequences of the disrupted global supply chains. However, to anticipate the recovery firstly requires the understanding of the effects that the pandemic has had on the supply chains: