IMF, Report:  Assessing the Impact of Supply Disruptions on the Global Pandemic Recovery

“We used two novel approaches to estimating the impact of supply disruptions in 2021 on global output and inflation. In all, we estimate that supply shocks weighted negatively on the global recovery and contributed positively to global core inflation. The impact on the level of global GDP ranges from between 0.5 percent and 1.2 percent, while supply shocks are estimated to have added around 1 percentage point to global core inflation. There is significant variation across regions, with those regions more directly exposed to supply disruption (particularly in the auto sector) suffering more severe output losses. Both methods employed in the paper have their limitations. Importantly, the empirical approach relies on the informativeness of industrial production and PMI data across countries. On the other hand, the structural approach depends crucially on the structure of the model, the plausibility of the pre-Covid projections, and the behavior of core inflation.”