The disruption to the flow of intermediate goods and services during the COVID-19 lockdowns has made governments and manufacturers ever more aware of the risks inherent in today's increasingly complex, specialised and global production processes.
Manufacturers, meanwhile, are speeding up their development of parallel supply chain operations in new host markets alongside existing production bases as a means to diversify and strengthen their operational resilience.
Markets in Southeast Asia will be the preferred destinations as new host locations. There will also be some re-shoring of activities back to the US, the euro area and advanced markets in Asia.
Jerome Jean Haegeli, Swiss Re Group Chief Economist, said:
"Global supply chain restructuring has become a key macroeconomic trend and the COVID-19 experience has accelerated changes. During the pandemic, lockdowns brought international exchange to a near halt, making businesses, and governments increasingly aware of the impacts that disruptions in today's very complex and specialised global supply chains can have."
There had been some tempering of globalisation fervour even before COVID-19 severely curtailed the movement of goods and people. A number of natural catastrophes over the last decade, such as the earthquake and tsunami in Japan in 2011, and widespread flooding in Thailand in the same year, inflicted costly supply chain interruptions across different industries. Rising political risks, such as new tariffs and a looming threat of global trade war, also prompted manufacturers to rethink their globalised production and sourcing strategies.
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