Supply chain bottlenecks in the world

 Despite the recovery of global trade, according to the World Trade Organization, many problems still face supply and supply chains that confuse world markets.

These bottlenecks in supply chains may mean an increase in inflation due to high production prices and an increase in demand for goods, amid a shipping crisis, which means that Arab countries are affected by these crises.

Economists have warned that the turmoil of the supply chain crisis may constantly drive increased producer prices, which will push up huge increases in consumer prices.

Economist, Mohamed El-Erian, who served as CEO of the global investment institution Pimco, had warned of problems that could last for two years or even more, which means “inflationary” winds accompanied by an unusual “economic stagnation”.

High-tech goods

Economic analyst, Wael Nahas, said in an interview with Al-Hurra that the world before the Corona pandemic was suffering from what is known as “stagflation,” as markets were not in their best condition, so they were suffering from stagnation accompanied by inflation in commodity prices.

However, the current crisis reveals a new type of inflation, as production chains began to face major problems, especially with regard to the production of goods with advanced technology, and it is associated with a crisis and a rise in freight prices, which will mean an increase in the prices of goods, especially new ones.

Nahas explained that Arab countries will be greatly affected, but in terms of rising prices, especially since the majority of the economies of Arab countries are consumerist, and therefore the prices of new products in them will be higher than they were.

He added that Arab countries should develop clear plans to confront the supply crisis, especially for important commodities of a strategic dimension, stressing that the waves of inflation in the Arab region will be with large price increases, which will put pressure on countries that are already suffering from economic downturn and high unemployment.

disturbing news

Financial analyst at CFI Group, Muhannad Erekat, told Al-Hurra that "supply disturbances are causing an increase in prices, prolonging delivery times and affecting the economic recovery."

"The shortage of consumer products and the increase in freight costs are worrying news for retailers and shoppers as well," he added.

Erekat fears that a number of Arab countries fall under harsh weather conditions, such as the Arab Gulf states, and suffer from a lack of fresh water and limited agricultural production, as these countries may struggle to provide basic and important commodities.

He believes that the majority of Arab countries have not been prepared to deal with the supply chain crisis, and are still unaware of the effects of this on different economies.

Erekat asserts that this crisis is an opportunity to enhance "investment in local manufacturing capabilities and reduce their dependence on other countries for production inputs."

Countries should also "diversify the sources of supply" and "invest in production capacity abroad", in addition to "increasing the capacity of strategic food stocks."

The chairman of DP World, Sultan Ahmed bin Sulayem, had recently warned that the crisis of supply chain bottlenecks could last until 2023.

Speaking to Bloomberg TV on the sidelines of the Expo, he added, "Global trade has been subjected to a crisis since the beginning of the Corona pandemic, and its intensity may recede in 2023."

Bin Sulayem also feared the "rocket rises" in the prices of shipping containers, which he attributed to a shortage in their numbers and delays in shipping operations.

And an analysis published by the “Price Oil” website, quoting the “Zero Edge” website, which specializes in economic affairs, stated that despite the prolonged duration of the expected crisis in supply chains, central bank governors believe that the “inflation” problem will be temporary, although they did not provide clear dates, or Timelines showing when this problem will actually end.