Supply chain disruptions set to constrain global economic growth

Current global supply chain disruptions are weighing heavily on the world’s post-pandemic recovery. Absa AgriBusiness explores this situation, and the effect it is having on South Africa’s agriculture sector.

- Marlene Louw

The world has faced numerous supply chain disruptions over the past two years. These included manufacturing disruptions due to COVID-19-related lockdowns, production issues brought on by input and electricity supply constraints, and shipping delays on account of disruptions at port operations.

In March 2022, the Chinese government again implemented a lockdown of the key industrial and financial hubs Shanghai and Shenzhen as a result of severe COVID-19 outbreaks. This is likely to add to the blow that two years of the pandemic and the Russia-Ukraine conflict have already dealt to global supply chains.

MANUFACTURING IN CHINA

Analysts note that the issues surrounding manufacturing disruptions in China are significant, as that country is responsible for almost one-third of global manufacturing capacity.

Towards the end of 2021, China experienced rolling blackouts due to electricity shortages, which added to production disruptions. This was underpinned by high coal prices, which were the result of China’s drive to make a more significant contribution to climate-change goals.

As mentioned here, China’s zero-tolerance policy towards COVID-19 has led to various lockdowns that have resulted in a halt in the production of various items exported from that country.