Since much of this price increase can be explained by supply-side constraints, base effects and catch-up effects, most of the recent strong rebound in inflation is likely to be temporary. Next year, we expect inflation to be broadly in line with the respective central banks’ inflation targets – that is, 2.2% in 2021 and 1.5% in 2022 for the Eurozone, and 4.2% and 2.2% in the US. Global demand should remain robust in 2022, thanks to the new infrastructure cycle, fiscal stimuli, and continued consumer recovery, with a stronger dependence on ecommerce.
“Even with people going back to stores, we could still see a kind of a legacy with ecommerce being stronger than it was at a global level before the crisis. So maybe that’s a structural change we will witness as the result of the epidemic,” Françoise opines.
Nevertheless, we expect export business opportunities to remain challenged by supply chain constraints for a while yet. Normalisation in shipping capacity is unlikely to occur before 2023, with price and capacity pressures on global trade likely to persist going into 2022, albeit less acutely than in 2021.
“We can still feel the impact of Covid-19 with the ripple effect of lockdowns,” Françoise points out, referring to the unexpected downside risks to economic recoveries and export opportunities associated with the Delta variant. “Those economies that chose the zero-Covid-19 strategy last year, and which made maybe the better choice at the time, now have to find a way to transition away from the zero-Covid-19 strategy, because it is costly for the economy. The renewal of such emergency measures is definitely a risk to import-export business opportunities that we need to monitor.”
The removal of public spending and other supportive measures associated with the Covid-19 pandemic is a risk too. “When these exceptional emergency policy measures are removed, we are likely to see an increase in insolvencies and credit events,” cautions Françoise. “It depends on how these emergency measures are being phased out by each government -- how they announce it, what and when they put it in place, etc.”
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