The IMF and the G20 will discuss the shortage of products due to bottlenecks and fears about the presistence of inflation

FILE PHOTO: Shipping containers are unloaded from a ship at a container terminal at the Port of Long Beach-Port of Los Angeles complex, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/File Photo
FILE PHOTO: Shipping containers are unloaded from a ship at a container terminal at the Port of Long Beach-Port of Los Angeles complex, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/File Photo

The world economy has been facing bottleneck in the supply chains that feed the inflation and threaten growth, a central theme of the meetings of the IMF and the world Bank, and of G20 and G7 this wednesday in Washington, United States.

The supply problems, triggered by increased demand for logistics transportation amid the recovery from the pandemic, combined with labor shortages, led the International Monetary Fund to revise downward growth forecasts for various countries, among them United States, China, Germany and the United Kingdom.

The world economy is facing a “particularly challenging moment”, Said in a press conference the managing director of the IMF, Kristalina Georgieva. And he warned about another variable that also contributes to supply constraints: the delay in anticovid vaccination in developing countries.

Near to 58% of the population in advanced economies is already fully immunized, compared to the 36% in emerging economies and less than 5% in poor countries, according to the IMF.

“We should be concerned about this divergence”, said, “because as long as it expands, this risk of disruptions in global supply chains will be higher and therefore the pressure on prices, the pressure on inflation will be higher”.

A woman shops in a supermarket in Germany (Photo: Reuters)
A woman shops in a supermarket in Germany (Photo: Reuters)

What is feared is that rising prices create a vicious circle forcing advanced economies to raise interest rates to contain inflation, which it would raise borrowing costs for developing nations and further delay their recovery.

Inflation in the United States, the world’s leading economy, rebounded in September and reached 5.4% year-on-yearthe Labor Department said Wednesday.

While the IMF projects inflation in advanced economies to decline by the middle of next year, “this mismatch between demand growth and supply lag undoubtedly creates pressure on prices“Said Georgieva.

The President of the World Bank, David Malpass, warned on the other hand that some of the price peaks “they will not be transitory”. 8.5% of global container shipping is stagnant in or around ports, double the number in January, he told reporters. And he added that factory and port closures during the pandemic disrupted supply, driving shipping rates and final cost of goods.

It will take time and the cooperation of policy makers around the world to figure it out.“, he claimed. Malpass also lamented the situation in developing nations that are already facing a “bleak” outlook and a “tragic development setback” caused by the pandemic that has driven 100 million people into extreme poverty and is causing debt problems for many. countries.

The German Angela Merkel before one of her last international summits (Photo: Reuters)
The German Angela Merkel before one of her last international summits (Photo: Reuters)

The global supply challenges are the focus of the meeting of finance ministers from the Group of 20 advanced economies (G20) and the smallest meeting of the Group of Seven (G7), which brings together the main industrialized powers.

Rishi Sunak, UK Finance Minister, who chairs the G7 until the end of the year, will call for global action to address this issue.

While your country looks particularly affected by these dysfunctions, also aggravated by the Brexit, Sunak said he will advocate for a better “coordination“To make supply chains”more resilient”.

The United States, the world’s leading economy, announced an initiative to ensure that products go “from the ships to the shelves”, With 24-hour operations in the main ports.

President Joe Biden foresees announce this agreement in a meeting this Wednesday with the leaders of the gigantic port of Los Angeles and the International Union of Longshoremen and Warehouses (ILWU).

Other companies, including Walmart, FedEx and UPS, also pledged to work extended hours, officials from the White House.

As the holiday season approaches, US Treasury Secretary Janet Yellen on Tuesday urged people not to panic, saying there are plenty of goods available and that price increases should be “transient”.

But he acknowledged that price pressures did not “They will disappear in the next few months. This is an unprecedented shock to the world economy”He told CBS.

(With information from AFP)

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