Economics: China, Russia and supply chain stress
Global value chains have been disrupted
Our supply chain monitor has captured the impact from China’s lockdowns and Russia’s invasion of Ukraine on global value chains. Supply-side bottlenecks have worsened.
But weaker demand has been more important
Rising inventories appear to be causing firms to pull back on new orders. As a result, global shipping costs have declined despite the hit to supply. This should help ease global inflationary pressures.
There are still upside risks for prices, though
US and European labour markets remain tight, which could boost wages and demand. China’s supply-side disruptions could worsen as lockdowns spread. Europe could still embargo Russian oil and gas.