Economists warn of effect of supply chain disruptions on inflation

Expectations of high inflation have eased in all regions of the world, but inflation remains vulnerable to shocks in commodity markets and supply chains, according to a report released Monday by the World Economic Forum (WEF).

Prolonged disruptions in the Red Sea, escalating regional conflicts and increased climate volatility, among other factors, are weighing on the outlook, according to the report, based on a survey of chief economists from both the public and private sectors and released at the start of the Davos Forum in Switzerland.

For example, it notes, the arrival of El Niño alone could increase global food prices by as much as 9%.

The report highlights how global inflation continues to moderate, underpinning expectations of a “slight decline” in interest rates in 2024 and notes that global inflation rates are forecast to reach 4.8% this year, down sharply from 5.9% in 2023 and 9.2% in 2022.

Core inflation is also decelerating, albeit at a slower pace, and is expected to reach 4.5 % in 2024.

This improvement in expectations “is especially notable” in Europe and the U.S., where the percentage of chief economists surveyed expecting high or very high inflation has fallen from 71% and 47%, respectively, in September to just 13% in both cases in the latest survey.

However, two-thirds of respondents continue to expect moderate inflation in Europe and the United States, and more than a quarter of respondents expect high or very high inflation in Latin America and the Caribbean (26%).


author avatar
Dominican Republic Live Editor

Leave a Reply

Your email address will not be published. Required fields are marked *

4 × five =

Verified by MonsterInsights