Saturday, 17 September 2022

Inflation seems to stay and countries wants closer & more stable supply sources | Leaders are important and foresight is crucial

In the National Day Rally, cost of living and the economic conditions were talking topics as Mr Lee talked about how the various events happening have caused inflation at a rapid pace and there is nothing much we can do. Countries will prioritise having a more reliable source and this could cost more as they might not look for the cheapest but for something that is more resilience and self-sufficiency is important.

This part really struck me:

The basic reality is that international economic conditions have fundamentally changed. It is not just the pandemic or the war in Ukraine. The recent decades were an exceptional period. Globalisation was in full swing; international trade grew rapidly; China’s economy was growing exponentially, and exporting more and more goods at highly competitive prices all over the world – this brought down the cost of many products, and kept prices world-wide very stable. This era is now over. China’s growth and exports are slowing. Their costs are going up.

No more cheap products

Outsourcing manufacturing to affordable countries that can do mass production at a fast rate was the way to go in previous years as we saw China become the factory of the world, made in China became plastered on almost every product as they were able to provide the best prices for consumers as well as companies.

However in recent times, as the Chinese government sticks to it’s Covid Zero policy, it is affecting factories that have set up their plant in China as numerous lockdowns and strict policy have caused delays and no one can anticipate what and when the next lockdown is.

Countries are now moving their productions to places that provide more reliability for example, Apple will be moving some of the China’s factory production for iPad to Vietnam due to the supply chain disruptions.

High tensions

We can also see countries starting to pay more attention to their supply needs and stopping exports whenever needed for price controls or supply issues. We definitely felt this when chicken supply from Malaysia was stopped and of course other countries like India imposed some limits on exports of sugar for some time.

Country leaders are important and foresight is crucial

We have seen many country leaders fail to do their responsibilities or even to listen to the people. I think it’s been a very tough period for all and with problems building up, gas and fuel prices, supply of food and extreme weathers, people have been wanting their government to do something on a higher level to help.

We have seen what happened in Sri Lanka as fuel prices went up crazily and the currency depreciated. Most recently, Pakistan is facing damaging floods and rebuilding will take a lot of time and effort. Future planning and having the foresight to anticipate challenges is very important for country leaders. As Singapore has a new leader coming on with new blood in the main team, it is very important to make sure our leaders understand the world situation and how Singapore can continue to flourish especially so in tough times.

Past methods might no longer work and I guess even for citizens like us, the future we will face personally will be different so lots of exciting and scary things to see. We are almost done with Q3 2022 and 2023 will come in the blink of an eye, wishing that all is well and that the world can get through the tough times ahead.


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