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Supply Bottlenecks: Where, Why, How Much, and What Next?
Author:
Oya Celasunnull

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,
Mr. Niels-Jakob H Hansen
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Ms. Aiko Mineshima
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,
Mariano Spector
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Jing Zhounull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 031
Language:
English
Publication Date:
17 Feb 2022
DOI:
https://doi.org/10.5089/9798400202476.001
ISBN:
9798400202476
ISSN:
1018-5941
Pages:
50
Keywords:
Output; Inflation; Manufacturing; Supply Constraints; PPI inflation; producer price inflation; supply-shock contribution; chip shortage; industry expert; Supply shocks; Producer price indexes; Labor shortages; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Supply constraints hurt the economic recovery and boosted inflation in 2021. We find that in the euro area, manufacturing output and GDP would have been about 6 and 2 percent higher, respectively, and half of the rise in manufacturing producer price inflation would not have occurred in the absence of supply bottlenecks. Globally, shutdowns can explain up to 40 percent of the supply shocks. Sectors that are more reliant on differentiated inputs—such as autos—are harder hit. Late last year industry experts expected supply shortages for autos to largely dissipate by mid-2022 and broader bottlenecks by end-2022, but given the Omicron wave, disruptions will last for longer, possibly into 2023. With supply constraints adding to price pressures, the challenge for policymakers is to support recovery without allowing high inflation to become entrenched.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 031