Supply Chain Vulnerabilities Likely to Persist

Abstract

After two years of substantial supply chain stress, new shocks emerged out of country-specific events in 2022. China imposed extensive lockdowns consistent with the country's zero-COVID-19 policy, disrupting production and logistics. The Russian invasion of Ukraine has had even greater consequences, most prominently in the European gas markets, but also through supply chain disruptions in agricultural, automotive, and other industries. Highly specialized global supply chains can result in greater efficiency and lower costs, but the concentration of production in a few countries also increases exposure to local geopolitical, physical, and other risk events. Depending on the relative concentration and importance of a product in global supply chains, country-specific shocks affecting that product can have global effects.

Author:

Erik Roos