Barometer Q3 2021: Supply chain and inflation headwinds hamper the global recovery

More than 18 months after the global recession triggered by the COVID-19 pandemic started, the economic recovery continues. This trend owes much to progress in the vaccine rollout over the summer, particularly in advanced economies. In turn, this is spurring a rebound in consumption of high-contact services. The situation remains heterogeneous in emerging economies: this rebound is benefitting export-oriented countries, while service-dependent economies continue lagging.

Despite the positive outlook, signs that the global recovery is losing momentum are accumulating. Pandemic outbreaks in critical links of the supply chain have resulted in supply disruptions, feeding price pressures. These disruptions are starting to affect manufacturers’ production and sales across the globe. Headwinds represented by supply concerns, labour shortages, and inflation, alongside the lingering threat of COVID-19, add to the list of risks and uncertainties.

In light of the continued recovery, Coface upgraded its risk assessments for 26 countries, including Germany, France, Italy, Spain, Switzerland and Belgium. Strong exports of manufactured goods to advanced markets are prompting upgrades for export-oriented economies in Central and Eastern Europe (Poland, Hungary, Czechia), in Asia (South Korea, Singapore, Hong Kong) and in Turkey. After downgrading 78 country risk assessments last year, these upgrades are in addition to the 16 already implemented in the 1^st half of 2020. They are accompanied by 30 sectoral assessment upgrades.