Global Supply-Chain Problems Escalate, Threatening Economic Recovery

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Component shortages, rising raw material prices and transport backup have added to the bottlenecks.

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Part of the problem is a global economy that is out of sync over the pandemic, sanctions and recovery. Factories and retailers in Western economies that have emerged from massive lockdowns have been eager for finished products, raw materials and components from longstanding suppliers in Asia and elsewhere. But many countries in Asia are still reeling under lockdowns and other coronavirus-related restrictions, hampering their ability to meet demand.

Meanwhile, the global labor shortage, often the result of people leaving the workforce during pandemics, is putting further obstacles in the way of producers.

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Barriers are projected to disrupt manufacturing output well into next year, hurting a sector that has driven a recent global recovery. According to the Kiel Institute for the World Economy, a German think tank, global industrial output rose above its pre-crisis levels in early 2021, but has remained stable since then. It recently lowered its forecast for world economic growth this year from 6.7% to 5.9%, due to supply-chain issues.

Supply-chain knots have helped push inflation to decade highs in the US and parts of Europe, impacting consumer spending. Rising inflation rates are already putting pressure on central banks, including the Federal Reserve, to begin rolling back their aggressive pandemic stimulus policies, adding another headwind to global growth.

In many cases it is already too late to save for the Christmas retail season, as massive transportation networks around the world limit supplies – even to home decorations. “If I can give one piece of advice to consumers right now, it’s to find and buy your Christmas tree early,” said Jami Warner, executive director of the American Christmas Tree Association.

At the center of the global impasse is China, the world’s largest trading country.

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