Thursday, 2 February, 2023
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Resurgence of Covid: Will global supply chains crumble again?

Resurgence of Covid: Will global supply chains crumble again?

The world is just trying to recover from recent events like the Russian-Ukrainian conflict, rising oil costs, falling dollar rates, and other key difficulties when the new Covid-19 variation Omicron BQ.1 presents a fresh challenge to global trade. That makes this the sixth generation of the Omicron BA.5 subclade. 

There have been tragic events all across the world in recent years. The global supply chain lost almost $8.5 trillion, with the largest damage coming to humans. After the international economy had begun to recover from these and deal with new difficulties, this development was cause for alarm. That is to say; the issue has to be addressed in China, where it first arose. This novel strain quickly expanded throughout nine Chinese provinces.

While the Chinese health department claims this strain is less dangerous than previous ones, it is nevertheless causing widespread illness and hospitalisations in many parts of the country. But that's not the point; the Chinese supply chain was severely affected. And so, how does this updated version work in this case?

Well-known examples include China's Zero Covid-19 policy and the subsequent outbreak of civil unrest in that country as a result of the population's refusal to heed the government's command. When did the government of China decide to choose a different path, and what consequences did it have? China had a new outbreak of infection not long after the unexpected termination of the suppression efforts imposed by the Zero Covid-19 Policy. The worryingly rapid rise in the number of recurrent infections raises the possibility of bottlenecks in the supply chain.

 The disease is expected to affect 12.5% of Shanghai's population. This will likely lead to an increase of about 5.43 million instances. They anticipate an increase after the New Year, but they are unsure of the exact amount. As of the 21st of December, 90% of workers at major Chinese ports were infected with Covid-19. (2022). Their supply chain management is increasingly deteriorating due to factors including sick truck drivers, closed factories and local suppliers, and clients who are taking longer to return from vacation. The rates of closure will be the highest, at 60%, in the provinces of Guangdong, Zhejiang, and Shandong. As a result of a shortage of parts and materials from their suppliers, several companies have had to cut back on production.

This has led to the renewed strain being placed on China's supply chain, and a recent survey conducted by World Economics found that business confidence in China was at its lowest level in a decade. The repercussions can be felt almost instantly throughout the entirety of the global supply chain. This is dreadful news for nations that have just started the process of recovering economically from Covid-19 crisis and re-establishing logistics processes from the ground up.

If the Chinese supply chain is permanently affected, it will have a domino effect on all other supply chains. Why? Because there can't be any manufactured things if there isn't any raw material. Looking back at past years will be a major hassle for everyone involved. Ninety-four percent of 1,000 companies are experiencing disruptions in their supply chains due to Covid-19, with 75% of those businesses reporting negative effects and 55% lowering their growth estimates as a result (already done). They aren't able to recover quickly from disturbances that affect numerous countries because they lack global resilience. The results show the potential effects of the new variety on the supply chain.

When discussing the supply chain for our country, we import and export materials to and from China, the US, the UK, and other European countries. Back in the old pandemic days, we had to deal with major setbacks in the supply line and massive losses. For example, in the garment industry, we buy raw materials from China, including the United States, the United Kingdom, and other European countries. Given the current state of affairs in China, the RMG industry in the rest of the world stands to suffer significant losses as well. This is because the majority of RMG materials are imported from China, and the RMG supply chains of other countries are dependent on our own. If something does go wrong, there will be a significant loss.

Although the Chinese government claims everything is under control and predictable. They also claimed to have improved their crisis response. However, they prophesied this year before the first epidemic, and then the world saw what happened, and they are still dealing with these repercussions.

Now the question is, what can Bangladesh do about these? And, what about world economy and global supply chain? What are they thinking now?

 

Md Shahriar Bin Nazmul, a student of North South University