Afternoon Coffee: U.N. forecasts global economy to shrink 3.2%; Mexico to restart manufacturing as some cite U.S. pressure; Cargill expands anti-child labor programs for cocoa farms

The U.N. has predicted that the global trade forecast will fall by 27% in the second quarter this year due to disruptions caused by the coronavirus, The Guardian reports. The pandemic has affected almost every type of industry, and the U.N. expects every category of goods to decline in trade for the rest of the year.

This fall in trade has prompted the U.N. to forecast that the global economy will shrink by 3.2% this year, according to The Associated Press. In a worst-case scenario with a second wave of the virus, the global economy could shrink by 4.9% by the end of 2020, the report said, with global output falling by about $8.5 trillion over the next two years. This news is a complete reversal from the beginning of the year, when the U.N. predicted the global economy to grow by 2.5% in 2020.

The reports noted that with almost 90% of the global economy under some form of lockdown due to the pandemic, it will take time for supply chains to get back up to speed. Many of China’s factories have begun to open again, but a large portion are working at 60%-80% of capacity, slowing recovery. However, various models from the U.N. and the International Monetary Fund (IMF) have predicted that the global economy will bounce back in 2021 by 3.4%-5.8%.

Mexico opening industrial plants

Mexico’s industrial plants are set to begin reopening next week after closing due to the coronavirus pandemic, The Associated Press reports. The news follows reports that the Mexican government has been pressured by U.S. officials to reopen manufacturing plants, especially in the auto industry, so that supply chains in the U.S. and Canada could begin moving again. Construction, mining and auto manufacturing will be the first industries to get back to work, the report said.

However, Mexican officials fear the further spread of COVID-19 with the reopening of these plants. The country saw its largest single day of infections earlier this week just prior to the announcement.

Grocery prices continue to climb

Prices of grocery items continue to soar, with the industry seeing the largest one-month increase (2.6%) in April, CNN reports. This is the steepest increase in almost 50 years and comes in the midst of national lockdowns due to the coronavirus, when many people are consuming more groceries and eating at home. Some grocery staples have become harder to find on store shelves, causing prices to climb due to rising demand. Prices on eggs alone rose more than 16%.

Several grocery chains interviewed by CNN blamed the increase in prices on manufacturers and producers, who are working with a reduced labor force and passing costs along the supply chain. While most think that this is a short-term side effect of supply and demand in the industry, the U.S. Department of Justice is looking into issues of price gouging from meatpacking companies.

Cargill expands anti-child labor programs for cocoa

Cargill, the U.S.-based agribusiness giant, has expanded its programs to combat child labor in the cocoa harvest, Supply Chain Dive reports. The company has been creating a child labor monitoring and remediation program in the five countries where it sources cocoa for several years, but this is the first time the efforts have been announced publicly. Many experts in the agricultural business worry that disruptions caused by the coronavirus, including the closing of schools, have increased the risk of child labor being exploited in at-risk communities if current conditions persist.

The programs include working directly with farmers to identify risk factors for child labor, training farming community members to survey items related to child labor and providing training for farming techniques to older kids not in school, the report said. Agriculture is the leading industry that exploits child labor.

SIG Procurement Technology Summit is in full swing

The Sourcing Industry Group kicked off the fully digital SIG Procurement Technology Summit earlier this week, and events are fully underway. There are full sessions scheduled for the rest of the week, including daily keynotes and breakout sessions. The Summit is a gathering of procurement industry experts discussing current and upcoming trends. The event is free for SIG members, but nonmembers are also encouraged to join.

The Summit runs through tomorrow, and registrants can still join online sessions or review on-demand content. Register here.

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