Supply chain disruptions are abating, though constraints remain

PANDEMIC-ERA disruptions to the global flow of goods are dissipating. Delays in supplier delivery times for global manufacturing have receded from their 2021 highs, and have weathered the disruptions from the Russia-Ukraine war and Covid-19 lockdowns in China this year. Freight rates for container, dry and liquid bulk shipping and air cargo have likewise fallen from their record highs.

These developments are good news for producers and consumers worldwide. The abating of supply chain disruptions means that production processes can resume smoothly, reducing the pressure on global inflation, including in the Asean+3 markets. For policymakers, moderating inflation allows for a greater focus on supporting the economic recovery. But are the bottlenecks clearing up for good?

Origins of the crisis

To answer this question, we look back to mid-2020 when Europe and the United States emerged from Covid-19 lockdowns – and their pent-up demand encountered severely constrained production capacities across the world. Worldwide movement restrictions and massive pandemic stimulus packages in advanced economies led to an e-commerce boom amid shortages of labour, equipment and raw materials.