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Bottlenecks: Causes and macroeconomic implications

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by Daniel Rees and Phurichai Rungcharoenkitkul
Bottlenecks in the supply of commodities, intermediate goods and freight transport have given rise to volatile prices and delivery delays. Bottlenecks started out as pandemic-related supply disruptions amid strong demand from the global economic recovery. But they have been aggravated by the attempts of supply chain participants to build buffers in already lean production networks – so-called bullwhip effects. Bottlenecks have been particularly severe in upstream industries – ie those that supply inputs used in many other products. These constraints have led to large international spillovers through global value chains. The direct inflationary effect of bottlenecks will likely be limited after relative prices have adjusted. However, sustained inflationary pressures could emerge if bottlenecks persist long enough to trigger an upward shift in wage growth and inflation expectations.

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Bottlenecks: Causes and macroeconomic implications

by Daniel Rees and Phurichai RungcharoenkitkulBottlenecks in the supply of commodities, intermediate goods and freight transport have given rise to volatile prices and delivery