The supply chain nightmare is driving up consumer prices and slowing the global economic recovery. Unfortunately, Moody’s Analytics warns that supply chain disruptions “get worse before they get better”.
“As the global economic recovery continues to gain momentum, it is becoming increasingly clear how it is being hampered by the supply chain disruptions that are now showing up on every corner,” Moody’s wrote in a Monday report.
In fact, the IMF cut its US growth forecast for 2021 by one percentage point on Tuesday, the highest figure for a G7 economy. The IMF cited supply chain disruptions and declining consumption, itself partly caused by supply chain bottlenecks such as the shortage of new cars amid the shortage of computer chips.
“Border controls and mobility restrictions, the unavailability of a global vaccine passport, and the backlog of being stuck at home have created a perfect storm that hampers global production because deliveries are not on time, costs and prices rise, and” As a result, global GDP -Growth won’t be as robust, “Moody’s wrote in the report.
Moody’s said the “weakest link” may be the shortage of truck drivers – a problem that has contributed to port congestion and has left gas stations empty in the UK. Unfortunately, Moody’s warned of “dark clouds” as several factors make overcoming supply restrictions particularly difficult.
First, the company pointed to differences in the way countries fight Covid, with China targeting zero cases while the United States “is more willing to live with Covid-19 as an endemic disease”.
“This poses a serious challenge to the harmonization of the rules and regulations according to which transport workers enter and leave ports and hubs around the world,” the analysts wrote.
Second, Moody’s cited the lack of a “concerted global effort to keep the global logistics and transportation network running smoothly.”
Others are much more optimistic about the outlook for the supply chain.
Jamie Dimon, CEO of JPMorgan Chase, said Monday that these supply chain issues will quickly go away.
“That won’t be an issue at all next year,” Dimon said during a conference at the Institute of International Finance, CNBC reported. “That’s the worst part about it. I think great market systems will adjust to what companies have done.”