Channel: IMF

Category: News & Politics

Tags: imfsupply bottlenecksinternational monetary fundsupply shocksimf researchmanufacturing outputimf report

Description: Supply constraints hurt the economic recovery and boosted inflation in 2021. We find that in the euro area, manufacturing output would have been 7.5 percent higher, and the rise in non energy producer price inflation would have been 5.5 percentage points lower in the absence of supply bottlenecks in the second half of 2021. Globally, shutdowns can explain up to 40 percent of the supply shocks. Sectors that are more reliant on differentiated inputs—such as autos—are harder hit. Late last year industry experts expected bottlenecks largely dissipate by end-2022, but given the Omicron wave and the war in Ukraine, disruptions could protract into 2023. With supply constraints adding to price pressures, the challenge for policymakers is to support recovery without allowing high inflation to become entrenched. Read the paper: bit.ly/38Vd1YK IMF-World Bank 2022 Spring Meetings: fundbankmeetings.org #IMFmeetings