Supply chain disruptions to ease in 2023 as firms adapt, says WEF
The World Economic Forum’s annual meeting in Davos began today © Photo by Dursun Aydemir/Anadolu Agency via Getty Images Just one in five (23%) chief economists expect supply chain disruption to have a significant impact on businesses in 2023, according to a report. The World Economic Forum’s (WEF) Chief Economists Outlook , produced for the WEF’s annual meeting in Davos, found half (50%) of experts considered it either somewhat or extremely unlikely that there will be an adverse impact from supply chain factors. The report said this reflected “significant stabilisation after Covid-19 restrictions and integration of war-related disruptions in business planning”. However, the report said the outlook for the year ahead was “gloomy”. Almost two-thirds of respondents consider a global recession to be likely in 2023, with 18% saying it was extremely likely – over double the amount that said so when the previous survey was conducted in 2021. More than three-quarters (77%) of respondents expected businesses to respond to headwinds by optimising supply chains. Fernando Honorato Barbosa, chief economist at Banco Bradesco said: “Businesses will face a completely different economic environment from now on. We have not seen such a combination in decades: high rates, geopolitical uncertainties, energy insecurity, and the need to rethink the global supply chains. “Amid that, there is a need to innovate, protect the environment, become more inclusive and reskill the labour force. No CEO has the roadmap to address these challenges in a smooth and predictable way. They will have to take larger risks and, as usual, face the burden of their decisions.” Nearshoring and reshoring are expected to take hold this year as “geopolitical trends overall are expected to continue to redraw the map of global economic activity”. Every respondent viewed it as likely (73% somewhat, 27% extremely) that economic activity will continue to reallocate around the world along new geopolitical faultlines. The wider economic impact of these geopolitical realignments will be felt through trade, investment, labour and technology flows, creating “myriad challenges and opportunities for business, even as supply chain disruptions are seen to impose a relatively low drag on business activity in the coming year”. Bangladesh and India may benefit from global trends such as a diversification of manufacturing supply chains away from China, the report said. Honorato Barbosa continued: “The long-term sustainability of a business has never been so dependent on these multidimensional factors. Taking care of its cash positions in an environment of worsening financial conditions is solely the starting point, but might not be enough to grant the survival of a company in this new era. “Forging resilience, integration and financial robustness with an eye on the people and nature will be mandatory. The risk of de-globalisation and acting to fulfil only the company’s own interests is real, but that is not in the best interest of society. Easier said than done, but true leaders will be called into action like no other time in the past.” NOW READ
