Supply chain disruptions, losses of 920

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Supply chain problems caused by the COVID-19 pandemic and Russia’s invasion of Ukraine could lead to a loss of 920 billion euros in gross domestic product (GDP) across the euro area by 2023. The potential loss is equivalent to by 7.7% of eurozone GDP in 2023, according to an Accenture report, according to a company press release.

Published at the annual meeting of the World Economic Forum in Davos, the report “From Disruption to Reinvention – The future of supply chains in Europe” explores three possible scenarios for how the war could unfold next year, simulating the impact of each scenario on euro area in terms of costs and recovery deadlines.

According to the quoted document, the disruption of supply chains due to the COVID-19 pandemic cost the euro area savings 112.7 billion euros of GDP in 2021. Before the war, the lack of supply of materials, logistical problems and inflationary pressures destabilized the return economic growth in Europe, and growing demand and preventive storage have hampered supply chains.

Russia’s invasion of Ukraine has exacerbated the situation. The problem of the semiconductor deficit, which was to be resolved in the second half of 2022, is expected to persist until 2023. A protracted war could lead to an additional GDP loss of up to 318 billion euros in 2022 and 602 billion euros in 2023, while inflation could reach 7.8% in 2022, before falling in 2023.

“Although experts agree that Europe will avoid a recession this year, the combination of the COVID-19 pandemic and the war in Ukraine has the potential to have a significant impact on the European economy, causing a significant slowdown in growth. Although before the war a kind of normalization of supply chains was expected in the second half of 2022, now we do not expect this to happen before 2023, maybe not even until 2024, depending on how it evolves. war, ”said Jean-Marc Ollagnier, CEO of Accenture in Europe.

In this context, the report highlights that addressing supply chain issues will be key to European competitiveness and growth as up to 30% of the euro area’s total value-added is based on the functioning of cross-border supply chains, either as a source or not. either as a production destination.

Moreover, the paper suggests that supply chain reinvention is needed to address a paradigm shift – supply chains have been designed primarily to optimize costs, while in today’s world they need to be also more resilient and agile to respond to growing supply uncertainties, while becoming a key competitive advantage to enable future growth.

“Visibility in supply chains, including level 2 and level 3 suppliers, is essential. Companies need to move from a “just-in-time” approach to a “just-in-case” approach, diversifying supply bases, planning alternative transportation routes, making distribution centers flexible and creating inventory. This comes at a price, but it is an “insurance policy” against future shocks. The secret is to invest in new technologies to make better use of data – from digital twins and analytics data to supply chain control towers – in the Cloud Continuum, which delivers tremendous computing power in a cost-effective, flexible and sustainable way. Said Kris Timmermans, who heads Accenture’s Supply Chain & Operations division.

On the other hand, the report highlights two deeper and longer-term challenges following the pandemic and the war: energy security, as European economies have to deal with their heavy dependence on oil and gas supplies, accelerating at the same time the reduction of net CO2 emissions to zero, and the non-correlation of talents, as a result of the aging population, the evolution of employees’ expectations and the changes in the demand for skills.

“The war in Ukraine will have a significant impact, increasing the number and duration of interruptions. The severity will depend on how the war evolves, but a reinvention is needed as a new economic order takes shape in the context of an inflationary environment, increased regionalization, the energy transition and a tense talent market. Improving energy efficiency and accelerating the transition to green energy sources will be key to achieving security. And the ability to attract, retain, retrain and retrain people is becoming one of the most pressing issues of the decade, ”said Michael Brueckner, Accenture’s Director of Strategy for Europe.

Accenture’s report “From Disruption to Reinvention – The Future of the Supply Chain in Europe,” is based on research conducted in collaboration with Oxford Economics. The analysis covers the euro area, consisting of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Spain, Slovakia and Spain.

“The report examines three possible scenarios for how the war could unfold next year, simulating the impact of each scenario on major European economies. In the first scenario, sanctions against Russia do not intensify and could even be reduced, mitigating supply chain disruptions. Unfortunately, this controlled impact scenario has expired. In the second scenario, which is the current benchmark scenario, the supply of goods remains volatile throughout 2022, which would mean that commodity prices would continue to rise. In this case, people would reduce non-essential expenses and companies would prioritize efficiency. In the third and most pessimistic scenario, the war is extended until 2023, which could lead to a wider embargo on Russian oil and gas, which could lead to a major disruption of the supply chain. , to an inflation that would reach 7.8% in 2022 and to a low consumer confidence “, mentions the quoted source.