When the spring sun began to shine over Norway, many also began to envision an end to the pandemic. More and more people were vaccinated, and the infection rates were on the decline in most of the world.
The economic recovery could begin, and many wished that the pandemic could soon be over. But now optimism has been replaced by worry.
– A threat
Admittedly, the OECD believes that the world economy will have an overall growth of 5.6 per cent during 2021, a decrease of 0.1 percentage points on the estimate in September. They maintain the estimate of a growth of 4.5 percent next year.
At the same time, they pour a little wormwood into the cup, for the prospect of a strong economic recovery has been replaced with warnings of lasting global challenges.
– We are concerned that the omicron variant of the virus will increase the already high levels of uncertainty and risk. It could be a threat to recovery, warns OECD chief economist Laurence Boon, according to German wave.
Advertiser Content
–
Do you know what the companies take to supply electricity to you?
–
The OECD report will be released on Wednesday «A Balancing Act». It’s gloomy reading.
While the demand for goods has skyrocketed, the supply side has had enormous difficulty keeping up.
“Lack of labor, corona-related shutdowns, rising energy and commodity prices and a lack of important materials are holding back growth and increasing cost pressures. Inflation has increased significantly in some regions early in this catch-up phase “, the verdict reads.
The fear of shutdowns is very real. A new shutdown has already been introduced in Austria, while several German states are considering it.
In China, the authorities practice zero tolerance for the coronavirus, and new cases of infection can quickly trigger quite extensive closure.
Alerts historical price bang
– Did not anticipate the problems
At the same time, soaring inflation has been the most talked about problem lately. In the United States, many experts have been very critical of the US Federal Reserve, which has long insisted on calling high inflation “temporary”.
But it has now moved away from that. On Wednesday, central bank governor Jerome Powell told Congress that “it’s probably time to retire that word.”
At the same time, Powell is opening up to reduce financial measures more quickly than originally planned.
The US Federal Reserve has bought government bonds to help keep the economy going through the pandemic. They have bought bonds for 120 billion dollars a month, which amounts to 35 billion Norwegian kroner a day, which they have financed by printing money.
The US Federal Reserve has decided to cut support purchases by NOK 15 billion a month, but Powell now opens up the possibility that they will proceed even faster with the downscaling of support purchases, writes Bloomberg.
For Powell admits that there was one thing they did not take into account when looking at inflation:
Advertiser Content
–
So friends get fooled – started power company
–
– What we overlooked when it comes to inflation is that we did not anticipate supply problems.
Stock exchange party according to interest rate decision
Sky-high inflation
Finanstilsynet in Norway is also concerned about inflation. They think it is uncertain whether it is temporary.
– If the increased inflation should persist or increase, there may be a need for a sharp monetary tightening in many countries. In that case, this will also affect the Norwegian economy and the Norwegian financial system, which is vulnerable to a sharp rise in interest rates, says director Morten Baltzersen, according to NTB.
In Norway, inflation is now up to 3.5 per cent.
In the 19 countries that make up the eurozone, inflation was 4.9 per cent in November. This is the highest number since statistics began to be kept in 1997, writes NTB.
In Germany, inflation peaked at 5 per cent in November, for the first time in around 30 years, while in the United States inflation is now up to 6.2 per cent.
In its report, the OECD states that inflation will reach a peak at the turn of the year, before it will eventually fall to 3.5 per cent towards the end of 2022 in the OECD countries.
Economics professor predicts sharp downturn
Concerned about China
But the problems can get worse. At least that is the opinion of several American experts. The reason? Omikron. The new corona mutation can hit the already hard-tested supply lines.
Advertiser Content
–
In this way, 5G can provide increased profitability for companies
–
“The supply chain is still vulnerable to pandemic-related disruptions, with the omicron variant emphasizing that the crisis is not over yet,” wrote Sian Fenner, an expert on Asian economics at Oxford Economics. CNBC.
One of the biggest concerns is that of China. So far no cases of the omicron mutant have been reported there, but there are cases in Hong Kong, so experts are following the situation closely.
“China is expected to strengthen its zero-tolerance policy, which has in the past included extensive city closures, imposed quarantines, as well as port controls, including monitoring of ships and cargo, to prevent them from getting corona cases,” said Per Hong, a senior partner at the consulting firm. Kearney.
Should China, which has seven of the world’s 10 busiest ports, close down, it will have “significant ripple effects”.
“If that happens, it will not only be shipping that will be pressured, but we are guaranteed to see an even greater shortage of important production components and larger order backlogs for core electronics, car and consumer products, depending on which regions are affected,” Hong said.
“Brutal” pressure: – Not seen since the 70’s
– People are afraid to work
The new mutated variant of the coronavirus came at a very inconvenient time, as there has recently been an improvement in tracking in the supply chain.
Gina Raimondo, the US Secretary of Commerce, is also concerned.
– It is too early to say, but I am worried, because we know that people are afraid to go to work, she says, according to CNN.
In the United States, there is a shortage of workers in a number of industries, partly because people do not dare to go to work. The Delta outbreak earlier this year exacerbated the crisis in the supply chain and led to the closure of factories for key electronic components, especially in Asia.
– It is too early to say, but this is a real problem – not only because of the outbreaks, but because people do not dare to go to work. It’s hugely disruptive, says Raimondo.
–
