Research Briefing | May 5, 2021

Global | Coronavirus Watch: When the chips are down

A global shortage of semiconductors is the latest hiccup to disturb international supply-chains. In our view, though, the shortage is largely a product of strong demand, reflecting the buoyant state of the industrial sector. As such, we do not see it as a major worry for the global economy.

Still, the semiconductor scarcity will cause problems for some sectors. The list of major global industrial players reporting shortages is growing daily and the effects on production are becoming visible. We now estimate that the impact could cut total global auto production in H1 by two million units.

But we expect much of the lost output will be made up later in the year. Consumers that cannot source a new car, mobile phone, or games console may wait for them to become available or spend the money on something else.

What’s more, healthy April services survey data in many parts of the world suggest that services may compensate for any future industrial weakness caused by the semiconductor shortage.

 

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