IMF demands diversification of supply chains

WASHINGTON:

The Covid-19 pandemic wreaked havoc on global supply chains but the new International Monetary Fund research shows that more diversification of source countries and inputs can significantly reduce the economic drag from supply disruptions.

In an analytical chapter of its forthcoming World Economic Outlook, IMF researchers said that countries experienced larger declines of goods imports, and GDP, in the first half of 2020 when trading partners imposed strict Covid-19 lockdowns.

Such declines revealed the vulnerabilities of value chains optimised for maximum efficiency and have prompted governments to call for more production to be brought home. "Dismantling global value chains is not the answer. More diversification, not less, improves resilience," the researchers wrote in a blog post accompanying the chapter.

Published in The Express Tribune, April 13^th, 2022.

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