Research Briefing | Sep 7, 2021

Global Coronavirus Watch: Stresses in supply chains build

Delta remains the primary threat to the recovery, but we also think that the drag from continuing, supply-chain disruption will be critical in the near term. Consequently, we’ve pushed back our expected timing of the revival in the industrial sector to mid-2022 and, due to this shift, will lower our global GDP forecasts.

Although manufacturing surveys have only recently shown clear signs of softening, global industrial production has been broadly flat for most of this year even though new orders have continued to climb.

With firms continuing to report lower-than-desired inventories and growing problems sourcing inputs, any upturn in industrial activity in Q3 is likely to be meagre.

We might see larger gains in Q4 if Covid cases fall back, particularly in Asia. But a strong and sustained bounce is far from guaranteed. Even if factories reopen, the container shipping and road haulage logjams will persist well into next year, ensuring supply chain issues remain a major headache for industry.

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