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.
Big shifts are underway in Russia-China trade
Data for Q3 on the volume of China's imports of crude from Russia show a drop against the June level. Rather than an indication that China's demand has peaked, this may be a sign that China is preparing for the Russian oil price cap recently agreed by G7 by shifting some of its purchases to the grey market.Find Out More
Levelling up is unlikely under the Liz Truss government
The government's levelling up ambition has probably been made more, not less, difficult by the new "Plan for Growth". Policies of lower taxes, less regulation, and a smaller state are unlikely to have much beneficial impact on long-term growth at the national level, let alone in those regions with long track records of underperformance.Find Out More