Supply-chain disruption poses the greatest risk to global economic recovery, according to Oxford Economics
Supply-chain disruption poses the greatest risk to global economic recovery, according to the latest Oxford Economics Global Risk Survey. It confirms rising business concerns on the back of ongoing supply-chain disruption.
More than half of respondents (56%) report being affected by the supply-chain crisis, with those affected generally expecting disruption to persist. Most (64%) expect disruption to end after mid-2022.
Businesses see numerous significant sources of disruption. The survey suggests that material/input shortages are the most important source of supply-chain disruption, cited as very significant by more than two-fifths of respondents.
But both transportation bottlenecks (26%) and temporary (eg Covid-related) labour shortages (23%) are cited as very significant by more than 1-in-5 respondents.
In addition, structural labour shortages and other non-labour capacity constraints are seen as either significant or very significant by more than half of the respondents.
Increased supply-chain concerns are reflected in the probability businesses attach to different global growth outcomes. On average, respondents attach more than 50% probability to growth lying in the 4%-6% range this year. But they see more chance of a weaker outturn, and less chance of stronger growth, than in last quarter’s survey.
Unsurprisingly, pandemic developments have dominated risk surveys over the past 18 months. But this quarter only 19% of businesses cite further coronavirus waves as the top near-term downside risk – the lowest figure for virus-related risks since the pandemic began.
By contrast, twice as many (41%) viewed supply-chain disruption as the top risk.
Climate change remains the top medium term threat
Medium-term risks remain varied. Climate change is still prominent, cited – alongside high debt levels – as a very significant risk to the global economy by around a third of businesses (34%).
But other risks (repeated pandemic waves, geopolitical risks, and a plunge in asset prices) are also cited by a fifth or more respondents.
Upside hopes are perceived to rest on consumers’ willingness to run down savings accumulated during the pandemic. A consumer spending boom is considered the single largest upside risk by almost half of businesses (46%, up from 41%).
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