On 25th December 2019, everyone thought of a random spending holiday like of the past years. But little anyone knew that 2020 will be different especially for Global Supply Chain Nightmare. And that once 2022 will reach, it will feel like a holiday was something of ancient times. It is no doubt that our life has changed drastically alongside the pandemic. But COVID has not just taken away our gatherings. But also how we live our lives. The standard of living is changing, and much depends on the purse. In essence, money is where make-or-break happens.
The world is facing severe inflation. And primarily, everything is because of the pandemic. People have no choice to go and work. Now it is the matter of success and downfall for many. Every economy in the world is facing economic crises. And the population blames its government for it. Petrol, for example, is surging heavily in the US and UK. While in Asia, it is a shortage of basic food necessities.
People fail to locate the way to positivity. And the reality can be worse. In addition, economy experts do not know where the world needs to step next. For some, the Chinese Lunar Year celebrations showed glimpses of success. But even then there are no positive trends. If the local bodies decide to uplift the gathering bans. No one knows if the condition will worsen or better out.
Global Supply Chain Nightmare Make-or-Break
The top stakeholders might not feel the true depth of the crises. But the employees are making sure that their voice reaches the top. GAP was a popular clothing brand in Canada and the US. Inflation, reduction in sales, and low profit has caused it to close down. News articles show a top brand closing sales every week. For these brands, the years 2020 and 2021 were hard. And there is no good trend that is coming their way.
A few current stable brands do not know what to look ahead for. If they continue their business, there can be consequences. But if they close down permanently, there will be more trouble likewise. Thus, 2022 has to deliver a lot. At first, people need to find the light at the other end. That is, they want jobs, food, and travel. These basic requirements can be the points to ponder by the global markets.
Global supply chains do not operate within a community. A lot of their profit depends on foreign sales. Online selling is a good argument against physical shopping. But for this, a business needs to be in liquid condition. Instead, such businesses stay happy for the little that comes their way. Either way, this year the governments and business holders need to act swiftly. They have to decide on ways to artificially empower businesses. If not, then the Global Supply Chain Nightmare is just about to begin.
IMFs Inflation Worries & Supply Chain
The International Monetary Fund has good importance when it comes to lending some money. Though it still lends money to the economies. Much is going against them likewise. But IMF is more than concerned the stakeholders to be ready. Be ready for the wave of inflation’s surge that is coming swiftly. For the people of the USA and Germany, relief in the near sight is hard to find. Instead, IMF says that the surge in inflation will continue this year for these economies. The big contribution to inflation in 2021 will remain the same in 2022. These are increasing fossil fuel and food prices.
Fossil fuel or fuel, in general, is rising a lot in the USA and UK. In essence, the people of the UK had to queue in to get their tanks filled. Whereas the people of the USA have to keep food items in check. In essence, different economies have to face diverse challenges nearby. But IMF does not indicate inflation in these departments alone. In addition, it says that top banks in the world will trouble the population further. For example, the US Federal Reserve will increase its interest rates this year early. And this increase will directly impact countries like Argentina, Turkey, and South Africa.
IMF further thinks that world economies will have to gear up fast. There is less time to do the blame game and sit up loose. Hence, the board says that advanced economies will face inflation of around 3.9% in 2022. In essence, the emerging economies will suffer more. They might face inflation of about 5.9%. However, the developing economies will face inflation close to the same amount. Hence, considering where your country falls, there will be consequences.
GDP Analysis by IHS Markit
The impact of COVID on global supply chains is immense. But this does not relate to the inflation you experience. In essence, the GDP of the country faces immense pressure when inflation rises. Hence, for many developing economies, this is a point to think about for the future. The website presents a comparison of the GD growth per year. It divides the bars into the world, USA, China, Japan, and Europe.
According to IHS Markit, in 2020, each country of the world faced downwards. It was barring Chine and its economy. This phenomenon is not hard to think about. With the pandemic rising in 2020, there was nothing anyone knew as a tackling tool. Thus, the economies did not see a positive trend. In 2021, there was a positive upward trend for all these countries. The expectancy is good for 2022 likewise. But IMF predicting the other direction is something to worry about.
Again, it is to note that each economic predictor considers different data. For instance, IMF considers the interest rate and rising inflation primarily. And the IHS considers GDP as the sole measurer for the economy.
Again using the economic predictions by the IMF is the requirement. In essence, IMF tends to be spot on when predicting economic trends. It is since the fund has a basis in different countries of some sort. Thus, you will find their threshold emerging ever since. According to the body, there will be a recovery of around 3.8% in 2023. In essence, it also terms it rapid considering the predictions of 2022 in 2021. Moreover, the developed economies will return to their full flow of positive trends this year. They will return to normalcy economically like they were before 2020.
However, the emerging and developing economies might have to travel more to reach this easiness. Poverty was a major crisis the world was fighting jointly. Before the beginning of the pandemic, the reduction was going decent. But at present, 70 million more people face hunger than before 2020. This poverty failure is similar to the business failure that supply chains observe.
The trends do not predict something ideal for all of them. In essence, several will still have to look for other ways to improve. There might be a few brands that might have to close down in developing economies. But if we are to consider it as natural and faithful, consequences will be hard. It is time that people move out of the shadows of IMF. And finally, the major stakeholders devise an artificial plan to tackle the economy. Else, they will wait another year for normalcy.