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Deutsche Bank Research: Global headwinds make continental value chains more attractive

The German export sector has had to cope with numerous challenges over the last few years. Not only the automotive sector, but also the shift of US trade policy and the increasingly important issue of climate change implied massive changes. That is why the long-term trend in many manufacturing sectors appeared unclear even ahead of the coronavirus pandemic. Now, COVID-19 has compounded already existing uncertainties. However, a number of developments support the thesis of Deutsche Bank Research that continental value chains are likely to gain importance.

ESG considerations raise questions about whether global supply chains really make sense.

Attention is shifting towards humanitarian, social and ecological issues. There is a broad social consensus that climate protection should play a major role in the recent stimulus packages. Even though we are currently experiencing the deepest recession since the Second World War, consumers are increasingly rethinking their consumption patterns. The fact that the German government is currently discussing a new “supply chain law” underlines that this is a relevant topic for society as a whole.

Geopolitical tensions make global supply chains less attractive.

Geopolitical trends and the growing importance of ESG issues already suggested before the COVID-19 outbreak that major changes in the supply chains might be necessary in the long run. The virus-related supply shortages have led to a considerable increase in the desire for security. There are, therefore, significant incentives to scale back the global supply chains, which were established for maximum efficiency, and return to more regional supply patterns.

The full comment can be found at: Deutsche Bank Research – Global headwinds make continental value chains more attractive


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