Bottlenecks and shortages: supply chain issues hamper global recovery
Power outages in China, chaos at UK gas stations, plant closures in Germany – supply chain problems around the world threaten to block a global recovery as countries try to emerge from pandemic-induced recessions .
This week saw a number of examples of supply chain issues currently hampering economic activity across the world: China ran out of coal for its power plants; the UK did not have enough truck drivers to transport petrol to fuel pumps; and gas prices are skyrocketing across Europe as demand exceeds supply.
“The risk is that even if economies reopen, growth slows down because we cannot produce the things people ask for,” said Niclas Poitiers, researcher at the Bruegel Institute in Brussels.
The difficulties can already be seen in the economic data: Chinese manufacturing activity contracted in September for the first time since the start of the year.
In France, manufacturing activity fell to its lowest level since early 2021. And in Japan, industrial production fell in August for the second consecutive month.
Companies are struggling to get their hands on the raw materials and components they need to run production lines.
– Flea shortages –
The auto industry, for example, suffers from a severe shortage of semiconductors – the electronic chips without which their models – both conventional and electric – cannot function.
Japanese giant Toyota cut its production forecast last month, and Stellantis has said it is expected to halt production at its subsidiary Opel’s German plant until early next year.
The industry is expected to lose $ 210 billion in revenue this year, twice as much as expected at the start of the year, according to consulting firm Alix Partners.
The textile industry also found itself at risk – Swedish giant H&M complained of “disruptions and delays in the supply of products” in September.
Furniture maker IKEA has announced that it will not be able to offer some of its flagship products due to a shortage of transport staff and high raw material prices.
Freight costs between China and the west coast of the United States more than quintupled during the year due to pressures resulting from the post-pandemic recovery, according to Freightos Baltic.
– No double dip recession –
“The interconnectedness of the global container industry is such that it is difficult for this industry to adapt quickly enough to such large supply shocks,” said Jacob Kirkegaard, of the Peterson Institute for International Economics (PIIE ) in Washington.
But he told AFP that supply chain problems would likely prove to be simply “a delay in the recovery. I don’t expect this to be a negative shock big enough to cause a double recession. hollow”.
Poitiers à Bruegel also estimated that “many of these problems will be resolved in the medium term”.
But the head of the US Federal Reserve, Jerome Powell, warned that the bottlenecks and hiring difficulties could “prove to be bigger and more lasting than expected”.
For now, however, it will be the coronavirus that continues to call the shots, experts say.
“In the UK and Europe, we talk as if the pandemic is over,” said Frances Coppola, author of the Coppola Comment financial blog.
“Global trade cannot return to normal while we still have countries where people are dying from Covid,” he wrote.
© 2021 AFP