No one would have imagined that COVID-19, which began as a localised health scare in a town in China in late 2019, would eventually metamorphose into a pandemic that brought about death, devastation, and a supply chain nightmare with far-reaching consequences for the global economy.
Undoubtedly, one of the biggest casualties of the pandemic has been global supply chains that served as the key arteries connecting the sources of raw materials, manufactured items, food, and medicines to markets across the world.
The arrival of the second wave of COVID-19 and the threat of a third and even more subsequent waves are indeed not good omens for an early global economic recovery.
While the pandemic continues to be the most important factor in the recent global supply chain crisis, a confluence of events such as natural calamities in different parts of the world (recent devastating floods in China, Germany and India) have cut off ports and sources of supply of both finished goods and raw materials from factories and markets.
As the world economy is trying hard to be resilient to the impact of the virus and natural disasters, the recent cyberattack on South African ports suggests that the ransom-seeking global crime syndicates are fast emerging as a new threat to supply chains.
Undoubtedly, the resilience of supply chains to the several threats they face currently is of utmost importance for a sustainable global economic recovery. The year 2020 was marked as a lost year in terms of global economic output growth with most economies averaging GDP growth in negative territory.
The expectations for 2021 is that the global economy is set for a sharp recovery after a shortlived recession caused by the second wave now hinge on how fast the world can fight back the newer variants of virus and restore the movement of goods around the world.
Ruptured supply chains have already triggered a domino effect on the global economy through raw material shortages and increased input costs translating into rising factory price inflation and food inflation that has the potential to turn into a longer-term stagflation across many economies.
While the world has indeed made significant progress in the fight against the virus in terms of vaccines and effective treatments to reduce the death rate, it needs more coordinated efforts among nations to fight newer mutations of the virus, efforts in helping nations afflicted by natural calamities, and of course, zero tolerance to cybercriminals to restore global movement of people and goods.