The biggest risk to the global economy no one is talking about — supply chain disruptions from Shanghai COVID lockdown

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No, everybody is talking about this. Business acquaintances, friends, family. We are all feeling the effect because production is not moving, due to port shutting down. Can’t get materials, or ingredients of materials to China for processing. Anybody in any manufacturing industry or on the fringe of that would know. China has ingrained itself in the very fabric of the global economy. Even if you have something that is not made in China, something in the supply chain of that goods is from China.

umlaut_and_cedilla

Where is the risk in that long term? After 2 years of disrupted supply chains some companies will figure out to built products somewhere else to spread out risk. That is a normal correction underway. Companies who can process orders gain revenue and beat those who can’t. The weak get destroyed, the strong rise. The reduction of globalization and inter region global specialization of economies is healthy and a good economic correction well overdue. It forces countries to produce fertilizers, plow the fields and step down mines to have food on the table. It forces economies to train more young people in real-world productive fields like engineering, not finance.

just-a-dreamer-

Shanghai and Shenzhen shutdowns will cause worsening inflation in the western world. It’ll be a major shakeup. The first lockdown were when inflation was low throughout the world. These lockdowns are at a time of record inflation after western governments took on huge amounts of debt at near zero interest rates. Central banks will be forced to decide between runaway inflation or raising rates high enough to combat inflation at the risk of not being able to service sovereign debt.

K2Nomad

my understanding is that with their less effective vaccines and limited immunity from lack of covid circulation, omicron would kinda have a free for all with their population If the world’s 1st biggest economic risk is locking down Shanghai, then the world’s 2nd biggest economic risk is NOT locking down Shanghai.

Permanganic_acid

I’ve seen people on the forum bring up the issue quite a few times which I appreciate but I’m still not sure what this all means. I’m not sure what a partial lockdown is and what it entails. If it’s not working manufacturing jobs, furloughing service workers, and stopping things critical to the economy, this is huge. If it’s a certain sector working from home, there should only be small losses. There’s just not enough information from things I’ve read to see how large the loss will be.

joedaman55