Global finance officials meeting in Washington on Wednesday focused on finding a way to ease supply chain bottlenecks that are driving up prices and threatening to derail the economic recovery.
As demand has exploded, providers have been unable to keep up. Ships are lined up in front of US ports waiting to unload merchandise, US consumer inflation remained high in September, world oil prices have risen more than $ 80 a barrel, the highest in years, and British families can be seen. forced to do without turkeys for Christmas dinner.
Global supply challenges are a key focus of meetings of the International Monetary Fund, the Group of 20 advanced economies and the smaller meeting of finance ministers of the Group of Seven.
Pandemic restrictions shut down manufacturing and trade routes, while suppliers, facing a shortage of workers and truck drivers, have been unable to keep up with the sudden surge in demand for goods as economies began to reopen.
The shocks, which some authorities fear will be lasting, have hampered the momentum of the recovery, prompting the IMF to cut growth forecasts for major economies such as the United States and Germany.
G7 officials agreed to work together to monitor difficulties.
“Supply chain issues are felt globally, and financial leaders from around the world must collaborate to address our shared challenges,” said UK Chancellor of the Exchequer Rishi Sunak, who chaired the meeting of nations. richest in the world.
The World Bank estimates that 8.5 percent of global container shipping is stagnant in or around ports, double the number in January.
Threat of inflation
The head of Italy’s central bank, Ignazio Visco, agreed with the IMF and others who have said that inflationary pressures are mainly due to short-term factors such as increased demand and supply problems.
But he acknowledged that “these can take months to disappear.”
G20 central bankers are studying the issue to see if there are “more structural factors at play” in the higher than expected inflation peak and “if there is any component … that could become permanent,” Visco told reporters.
Central bankers are on a fine line between supporting the recovery with favorable financial conditions and avoiding a permanent rise in inflation.
The G20 statement said central banks “will act as necessary” to address price stability “while analyzing inflationary pressures when they are transitory.”
But World Bank President David Malpass has warned that some of the price spikes “will not be transitory.”
“It will take time and the cooperation of policy makers around the world to solve them.”
IMF chief Kristalina Georgieva said the delay in vaccination rates to contain the pandemic in developing countries is contributing to supply constraints and “as it expands, this risk of disruptions in global supply chains will be higher”.
In the world’s largest economy, US President Joe Biden announced on Wednesday an initiative to ease the backlog by pushing for 24-hour service at ports and suppliers.
He obtained commitments to work extended hours from the leaders of the gigantic West Coast port of Los Angeles and the International Union of Longshoremen and Warehouses, as well as companies such as Walmart, FedEx and UPS.
But Biden said policies must be designed to reduce reliance on single sources and boost domestic production to avoid such supply shocks.
“Never again should our country and our economy be unable to make the critical products we need because we don’t have access to the materials we need,” Biden said. “Never again will we have to depend too much on one company or one country.”
That theme was echoed by French Finance Minister Bruno Le Maire, who told reporters on the sidelines of the meetings: “The answer is in one word: independence.”