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The global supply chain nightmare is about to get worse

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The supply chain nightmare is driving up prices for consumers and slowing global economic recovery. Unfortunately, Moody’s Analytics warns that supply chain disruptions “will get worse before they get better.”

“As the global economic recovery continues to accelerate, what is increasingly evident is how it will be hampered by the supply chain disruptions that are now appearing around every corner,” wrote Moody’s in a Monday report.

Indeed, the IMF lowered its US growth forecast for 2021 on Tuesday by a percentage point, the highest for any G7 economy. The IMF cited supply chain disruptions and weakening consumption – which itself was in part due to supply chain bottlenecks such as the lack of new cars in the market. part of the shortage of computer chips.

“Border controls and mobility restrictions, the unavailability of a global vaccine pass and pent-up demand for being stuck at home have combined for a perfect storm where global production will be hampered. because deliveries are not made on time, costs and prices will increase and As a result, global GDP growth will not be as robust, ”Moody’s wrote in the report.

Moody’s said the “weakest link” could be the shortage of truck drivers – an issue that has contributed to congestion at ports and the drying up of service stations in the UK. Unfortunately, Moody’s has warned that there are “dark clouds ahead” as several factors make it particularly difficult to exceed supply constraints.

First, the firm highlighted the differences in the way countries are battling 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 for the harmonization of rules and regulations by which transport workers enter and leave ports and hubs around the world,” the analysts wrote.

The global supply chain nightmare is about to get worse

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.

JPMorgan Chase CEO Jamie Dimon said on Monday these supply chain hiccups would fade quickly.

“It won’t be a problem at all next year,” Dimon said at a conference hosted by the Institute of International Finance, CNBC reported. “This is the worst. I think large market systems will adapt to it like companies have.”

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