Redrawing supply chains, a sharply polarised world, tightening monetary policies, slower growth – these are times when responding to one crisis could create another elsewhere
Corporate chiefs, economists, and policymakers of the government are having sleepless nights. Corporates are grappling with redrawing supply chains along geopolitical fault lines as the world gets sharply polarised; policymakers are tightening monetary policies to combat inflation but risking slower growth. These are paradoxes when finding the answer to one challenge creates another crisis elsewhere. For instance, if subsidies are given to citizens to offset high energy costs, this action runs against a tighter monetary policy needed to address inflation. Redrawing supply chains would mean higher costs, lost time, and market share in the immediate term before the gains start to come in.
Central banks in most countries, led by the United States, are pulling back the pandemic stimulus and raising interest rates to combat runaway inflation. This is having an unintended impact on slowing economic global growth. The sombre economic mood is decidedly different from the early part of the year when the world was anticipating a post-pandemic economic rebound. The May 2022 Chief Economists’ Outlook from the World Economic Forum issues a dire warning about recovery being disrupted.
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