The world economy is caught in the perfect storm

From beef soup in Tokyo to fried chicken in London, consumers are beginning to feel the pain caused by the sharp rise in costs that are sweeping the global economy, writes Reuters.

The return as restrictions were eased revealed a shortage in supply chains, with companies looking for workers, ships and even fuel to power factories, threatening economic recovery.
The largest chicken producer in the UK has said that the 20-year period in which the country has enjoyed cheap food is coming to an end, and food price inflation could reach double digits.

“The days when you could feed a family of four with a 3-pound ($ 4) chick are coming to an end,” said Ranjit Singh Boparan, owner of 2 Sisters Group.

The lack of workers, truckers and butchers, while the world’s fifth largest economy is facing the effects of Brexit, as well as COVID, exacerbates the tensions felt globally by international affairs.
IKEA rents several ships, buys containers and redirects goods, with the world’s largest furniture brand trying to mitigate the “perfect storm” of disruption.

Jon Abrahamsson, CEO of Inter IKEA, told Reuters that he expects this crisis to extend into 2022, with the biggest challenge being bringing goods from China, where about a quarter of IKEA products are made.
IKEA said stores in North America were hardest hit by the lack of products, followed by Europe.
In the United States, President Joe Biden on Wednesday urged the private sector to help reduce bottlenecks that threaten to disrupt the US holiday season. Biden said the port of Los Angeles will join the port of Long Beach to unload about 500,000 containers, while Walmart, Target and other large retailers will expand their night operations to help.

At a time when central bankers are on high alert and inflation in Spain, Ireland and Sweden has reached 13-year highs, European Central Bank President Christine Lagarde reiterated that rising inflation in Europe is temporary and said there is no signs that this will be reflected in salaries.

“The impact of these factors is expected to fade over the next year, reducing annual inflation,” Lagarde said.
Inflation in the euro area is expected to reach 4% before the end of the year, double the ECB’s target, and a growing number of economists see it above target throughout 2022.

Declining electricity supplies suggest a bleak winter outlook.

While it is cooling in northern China, coal prices have remained close to record highs, with power plants stocking up. Meanwhile, Coal India, the world’s largest coal mining company, has said it has temporarily cut off supplies to non-energy users, while India is struggling with one of the worst electricity shortages in history.

China’s energy crisis, caused by coal shortages, high fuel prices and booming post-pandemic industrial demand, has halted production, including at factories supplying major brands such as Apple.
The International Energy Agency says the crisis could increase oil demand by half a million barrels a day. “Higher energy prices also add to inflationary pressures which, together with power outages, could lead to a slowdown in industrial activity and a slowdown in the economic recovery,” the IEA said in its monthly oil report.

The most important economic institutes have reduced their common forecast for economic growth in 2021 in Germany, the largest European economy, to 2.4% from 3.7%, given that supply bottlenecks impede production.
German government and industry sources told Reuters that the government intends to reduce pressure on consumers due to rising energy bills by reducing by 43% next year the surcharge that helps finance renewable energy investments.

And in Singapore, two energy suppliers, including one of the largest independent suppliers, are leaving the market, while at least three others have stopped accepting new customers due to the sharp rise in wholesale energy prices.
Meanwhile, the White House has been in talks with US oil and gas producers to reduce fuel costs, two sources familiar with the matter said. The average retail cost of a gallon of gasoline in the United States is at its highest level in seven years, and winter fuel costs are projected to skyrocket.
The Dutch digital navigation and mapping company TomTom has warned that supply chain problems in the automotive sector could last until 2022. “Collectively, we have underestimated how big the supply chain problems have been or become, and especially the lack of semiconductors.” , TomTom chief financial officer Taco Titulaer told Reuters.
A global shortage of semiconductor chips has forced carmakers that are still recovering from coronavirus to stop production again.

Italian-American carmaker CNH Industrial said on Wednesday it would temporarily close several European factories producing agricultural vehicles, commercial vehicles and powertrains due to problems in purchasing components.

Source: Cotidianul RO by

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