Global demand for consumer goods has rebounded since the second half of 2020, driven initially by large government stimulus packages and, more recently, by resilient capital expenditures and swift vaccination rollouts in most developed markets. But supply constraints remain.
Some large emerging market manufacturing countries continue to struggle to contain the virus, while sectors such as semiconductors continue to face capacity shortages due to surging demand for automobiles and electronics. Logistical bottlenecks, caused by disruptions to ports, shipping lines and domestic transportation, have lengthened delivery times and further weighed on the supply shortage in some regions. As a result, inventories quickly run out and inflation has spiked in the U.S. and other markets.
However, we expect the supply bottlenecks to ease towards year-end, as production increases, shipping congestion clears, developed market demand for goods declines, and consumers in advanced economies shift spending to services (assuming no further disruptions from the pandemic).
A differentiated supply picture
Overall, Asian production has recovered better than other regions (see Figure 1). In East Asia, where the pandemic has been relatively well-contained and most factories have remained open, industrial production has picked up quickly since the second half of 2020. China’s
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