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“It is better to take many small steps in the right direction than to make a great leap forward; only to stumble backward.”Proverb
The global economy is slowing down; businesspeople sense it, and the numbers back up the sentiment. This creates a host of challenges for supply-chain participants, who previously saw constant expansion as a pleasant problem to have, but now are finding themselves navigating more troubled waters.
Part of the problem concerns the reasons why growth has slowed. Four major factors led to the current deceleration: the end of hyper globalization, the conclusion of the commodity super cycle, a dearth of reduced-load credit opportunities and the disappearance of opportunities to leverage integrated global trade.
These developments have created a series of challenges, including more difficulties in attaining cost savings.
Future economic growth is expected to follow a more incremental, or stair-stepped path, rather than the easily understood expansion of the past. With this more complex pattern, more management effort is required.

The need for significant monitoring is particularly critical in emerging regions including Brazil, Russia, India and China, typically referred to as the “BRIC” markets. The BRIC countries have experienced significant growth due to a business influx driven by the introduction of western manufacturers, combined with and expansion in Chinese imports and exports. However, while these regions have seen rapid growth and consequent expansions in gross domestic product (GDP), they have typically failed to establish effective business controls. This can, and probably will, cause market disruptions sooner rather than later.
On top of these more empirical concerns, global market values are flattening as well, since worldwide GDP growth as a whole is also beginning to slow.
Nevertheless, there are some bright spots on the horizon, including new expansion interest in Vietnam and Mexico, since both of these countries have been able to sustain and maintain higher growth than expected. For example, China was previously seen as the winner when compared with Mexico’s manufacturing and good import value, but this is no longer true.
While China’s imports are flattening, Mexico’s are expanding, which heralds additional growth in the future. This situation also exists in Vietnam, where commercial growth previously had been weaker than in China. Nonetheless, Vietnam’s fortunes have improved apace due to lower costs, while the expense of doing business in China is continuing to balloon.
In the end of the day, then, the growth cycle continues to ebb and flow as it should, and over time will again reach previous levels of expansion. Nevertheless, the age of rapid worldwide economic expansion is over for now. The new era will require both patience and hard-eyed management to attain success.
Chris G. Christopher Jr. is the director of macroeconomic and global consumer markets for IHS
Posted December 5, 2014

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