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The international economic order is under significant stress, reducing near-term growth prospects and heightening uncertainty about the medium-term outlook.
- Global economic growth will decelerate. Led by several major economies, the global economy has started to slow, and this deceleration will continue in 2019. The Global Business Policy Council forecasts moderate global economic growth of 2.9 percent this year, followed by slowing growth through 2023. There are cyclical, structural, and political risk factors contributing to this deceleration
- Asia will continue to be a bright spot. The strongest regional economic performance will be in Asia, led by India, which continues to be the fastest-growing major economy. Although China’s economy is slowing, its growth rate will remain robust in the coming years. Asia is leading the world in economic integration, with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership recently coming into force and the Regional Comprehensive Economic Partnership still under negotiation.
- The international economic order is on thin ice. Governance of the global economy is fragmenting as multilateral institutions become less representative of current realities and economic integration becomes more regionalized. The potential demise of the post-World War II economic order would herald weaker long-term prospects for global economic growth and prosperity as well as a more complicated international regulatory environment for companies.
- The global trade system is at most acute risk of unraveling. Protectionist policies, violations of both the rules and the spirit of free trade agreements, and a looming risk that the World Trade Organization’s dispute settlement mechanism will cease to function create profound risks for the current system of international trade. In addition, the US–China trade war threatens to weaken global growth prospects while raising costs and creating supply chain disruptions for many companies.
- Companies need to adjust to slowing growth in a multi-local world. It is becoming clear that the new age of multi-localism—characterized by the preference for local communities, industries, products, cultures, and customs—is extending into international economic governance. National governments are going it alone to implement policies outside the structures of the traditional multilateral institutions and are pursuing regional economic integration as global agreements become less desirable or untenable. To compete in this environment, companies may need more regional supply chains and greater devolution of management and operations to the local level.
Extract from Kearney Global Business Policy Council (GBPC)
Ceo & Founder
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