Leaders of industrialized countries pledged in Washington to address logistics problems caused by the pandemic, which are driving up prices and slowing global growth.
Global supply chain bottlenecks are a central theme at the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB), as well as in the appointments of the finance ministers of the Group of 20 advanced economies (G20) and the Group of Seven (G7), which brings together the main industrialized powers.
Restrictions due to the pandemic altered the production and distribution of goods, while suppliers are unable to meet the sudden increase in demand when activity is reactivated.
These disruptions, which some authorities fear will be long-lasting, led the IMF to lower growth forecasts for several countries, including the United States, China, Germany and the United Kingdom.
The G20 finance ministers and central bank presidents said they will “use all available tools for as long as necessary” to counter the impact of the pandemic and avoid “any premature withdrawal of support measures.”
But they warned that supply problems are likely to persist, along with rising prices.
The World Bank estimates that 8.5% of container shipping worldwide is stagnant in or around ports, double the number in January.
“Inflationary pressures”
The director of Italy’s central bank, Ignazio Visco, agreed with the IMF and others who have said that inflationary pressures are mainly due to transitory factors such as increased demand. But he acknowledged that “these can take months to disappear.”
The G20 central bankers are studying the issue to see if there are “more structural factors at play” in the higher inflation peak than expected and “if there is any component that is beginning to be transitory but could become permanent,” Visco said.
The challenge is to support the recovery with favorable financial conditions while avoiding a permanent increase in inflation.
The G20 statement stated that central banks “will act as necessary” to address price stability “while analyzing inflationary pressures where they are transitory.”
But the president of the World Bank, David Malpass, warned that some price peaks “will not be transitory.” “It will take time and the cooperation of policy makers around the world to solve it,” he said.
The vaccination factor
IMF Managing Director Kristalina Georgieva warned that the delay in vaccination to contain the pandemic in developing countries also weighs.
About 58% of the population in advanced economies is already fully immunized, compared to 36% in emerging economies and less than 5% in poor countries, according to the IMF.
“We should be concerned about this divergence, because as it widens, this risk of disruptions in global supply chains will be greater,” he said.
What is feared is that rising prices will create a vicious cycle that forces advanced economies to raise interest rates to contain inflation, raising borrowing costs for developing nations and further delaying their development. Recovery.
Malpass 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 in many countries. .
“Never more”
In the United States, the world’s leading economy, the disruption is such that President Joe Biden made the Port of Los Angeles, the destination for 40% of the containers that arrive in the country, and the American port union work more nights and weekends to reduce queues that slow the delivery of many products.
Other companies such as Walmart, FedEx and UPS have also agreed to extended hours to accelerate the movement of products “from ships to shelves.”
But Biden pointed out that policies must be designed to reduce reliance on single sources and boost domestic production to avoid these supply shocks.
“Never again should our country and our economy be unable to make the crucial products we need because we don’t have access to the materials we need. We will never have to depend too much on one company or one country again, “he added.
The same concept was repeated by the French Minister of Finance, Bruno Le Maire, who stated on the sidelines of the meetings: “The answer is in one word: independence.”
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