Recession’s impact to be uneven across geographies, economy segments: Head S&P Commodity Insights

S&P Global’s Saha also feels that amid the rising geopolitical tensions and a global pandemic, the global supply chains are also getting reoriented.

Even though the odds of a global recession may be high at this point, its impact is going to be distributed depending on a host of factors, the head of the commodities vertical at one of the world’s largest financial information and analytics firm has said.

Speaking exclusively to Business Today during a recent trip to the country, the president of S&P Global Commodity Insights, Saugata Saha said, “What eventually matters is how long that lasts, how deep it runs and how much time recovery takes. What we have also seen is that across the world, recessions tend to have a very different impact on different geographies.”

Citing the brief global slowdown that accompanied the Covid-19 pandemic, Saha said that some parts of the economy and population recovered sooner than others.

“That depended on whether you were a white or blue collared worker or which [industry] segment you were working with. Whether you were an airline employee or a provider of professional services. While the odds of a recession are 40-50 per cent, the outlook is going to be very distributed. It will vary depending on factors such as the part of the world, segment of the economy, etc.” said Saha elaborating.

He also emphasised that the role of fiscal stimulus extended by governments of western economies in the pandemic’s immediate aftermath must not be understated. By providing that much-needed financial support through transfer or support payments in that period of uncertainty, the west was able to avoid slipping into a deep depression.

Reengineering global supply chains

On being asked about the need for reengineering global supply chains due to the rising geopolitical tensions and a global pandemic, Saha said the process was already underway.

“We are seeing a lot of supply chain components moving borders and geographies because not only does everyone want it at the lowest cost but also lowest cost and high reliability. And we are seeing that across commodities classes as well,” he averred.

As part of its supply side forecasting, S&P has been keeping close tabs on this global reorientation of supply chains. Giving the example of China, he said as a predominant supplier of solar panels, the country had controlled the supply chain right from silica sand to the finished product. However, now most major economies including India were working towards developing indigenous solutions for solar panels.