As the global shortage of raw materials and therefore consumer goods continues
By The Forex Review - 20 / June / 22 509.webp "As the global shortage of raw materials and therefore consumer goods continues")
Dominick Bell
Restarting supply chains "will take time," Italy's central bank governor Ignazio Visco said at a G20 press conference. (Source: CHINA STRINGER NETWORK)
As the global shortage of raw materials and therefore consumer goods continues, the leaders of the industrialized nations have decided to take matters into their own hands. Meeting in Washington at the financial meetings of the IMF, the G20 and the G7, they pledged on Wednesday to address logistical issues that are fueling inflation and slowing global growth.
And it's not for nothing that the difficulties with global freight transport are getting worse. "We estimate that 8.5% of the world's container traffic is blocked in or around ports, double the rate in January," said World Bank President David Malpass.
The main reason? Imbalance between supply and demand after the recovery of economic activity. Supply problems are actually caused by excessive demand for production that needs to be restarted and a shortage of labor. However, these disruptions lead to an increase in the cost of goods and shipping costs, the increase of which sometimes, according to David Malpass, "will not be temporary".
Less dynamic global growth than expected
The disruption to supply chains is such that Joe Biden, for example, pushed the Port of Los Angeles, where 40% of containers destined for the US arrive, and the American dock workers union to agree to work more nights. and on weekends to shorten the queues that slow down the delivery of many products.
In addition, several companies, including Walmart, FedEx and UPS, have pledged to work more nights to expedite the removal of their containers from ports.
A paradigm shift for the American president, who believes that the United States should never again be unable to produce" the goods it needs due to shortages.
On the other hand, these bottlenecks will affect growth “in the coming months and years”, French Finance Minister Bruno Le Maire had previously lamented. The International Monetary Fund has already revised down its growth forecasts. For the world, it should be +5.9% in 2022, i.e. -0.1 point less. As for developed countries, growth is expected at the level of +5.2%, i.е. -0.4 less than the forecast for 2022.
With this in mind, the word "independence" is heard by many, especially by the French Minister of Economics. Meanwhile, British Chancellor Rishi Sunak called on the G7 financial group, of which he is chairman until the end of the year, to take global action. His country, which has already faced intense post-Brexit tensions, is particularly affected by these dysfunctions. As such, he advocates better "coordination" to make supply chains "more resilient".
Products that have become rare
Right now, "it will take time" to restore supply chains, Italian Central Bank Governor Ignazio Visco said at a G20 press conference. However, Ignazio Visco is very optimistic that in the coming months the bottlenecks " will disappear and prices will drop". An optimism that is not unanimous at a time when supply problems for certain products are taking root. "We need to see if there are additional structural factors,", he relented.
Many items are indeed rare in US stores, such as bicycles, tennis balls, and mobile phones. Production is still interrupted due to pollution peaks since the start of the Covid-19 pandemic, although demand is strong.
In addition, many companies are having difficulty recruiting for critical positions in the supply chain, from movers to truck drivers.
Rise in energy prices
Another point of particular concern for leaders is rising energy prices. In Europe, the explosion in gas and electricity prices has even prompted some states to react. In France, gas prices have already jumped 57% since the beginning of the year, but are expected to rise again by 10% in November.
In this regard, the IMF recommended on Wednesday that targeted measures be taken to help the poorest households and not resort to general subsidies, which are very expensive and benefit rich households.
Moreover, "they lead to very negative incentives for the environment" by supporting the consumption of polluting energy resources, said Paulo Medas, an IMF spokesman. However, "we need to accelerate the transition to energy sources to become less dependent on fossil fuels, this is the only long-term solution" to the problems of price volatility, Bruno Le Maire emphasized again.< /p>
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