The supply chain nightmare is driving up prices for consumers and slowing the global economic recovery. Unfortunately, Moody’s Analytics warns that supply chain disruptions “will get worse before they get better.”
Moody’s wrote in a Monday report, “As the global economic recovery continues to gather steam, what is becoming increasingly clear is how it will be impacted by the supply-chain disruptions now visible around every corner.” ”
In fact, the IMF on Tuesday slashed its 2021 US growth forecast by one percentage point, the highest for any G7 economy. The IMF cited supply chain disruptions and weak consumption – driven in part by supply chain constraints such as a lack of new cars amid computer chip shortages.
“Border controls and mobility restrictions, unavailability of a global vaccine pass, and stuck-at-home demand have combined for a perfect storm where global production will be disrupted as deliveries are not made on time, increasing costs and prices and As a result, GDP growth around the world will not be as strong,” Moody’s wrote in the report.
Moody’s said the “weakest link” may be a shortage of truck drivers – an issue that has contributed to overcrowding at ports and drying up gas stations in the United Kingdom. Unfortunately, Moody’s warned that there are “dark clouds ahead” as a number of factors make overcoming supply constraints particularly challenging.
First, the firm pointed to differences in how countries are fighting Covid, with China aiming for zero cases while the United States is “more inclined to live with Covid-19 as an endemic disease”. “
“This presents a serious challenge to the harmonization of the rules and regulations by which transport workers move in and out of ports and hubs around the world,” the analysts wrote.
Secondly, Moody’s cited a lack of “concerted global effort to ensure smooth operation” of logistics and transportation networks around the world.
Others are more optimistic on the supply chain outlook.
JPMorgan Chase CEO Jamie Dimon said on Monday that these supply chain bottlenecks will soon be removed.
“It won’t be an issue at all next year,” Dimon said during a conference hosted by the Institute of International Finance, CNBC reported. “That’s the worst part of it. I think the great market system will adjust to it like companies.”