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Sources of supply chain disruptions and their impact on euro area manufacturing

Author

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  • De Santis, Roberto A.

Abstract

This box reviews the key factors that have been causing global supply chain disruptions and assesses their impact on euro area industrial production. After the exceptionally swift and strong rebound in global demand since the second half of 2020, supply has been increasingly unable to meet demand, with repercussions on euro area manufacturing production. Moreover, disruptions associated with container shipping, shortages of raw materials and semiconductors, as well as selective lockdown measures in key Asian countries, have also adversely affected the normal functioning of global supply chains. These disruptions are estimated to have reduced the level of euro area industrial production by 2.6% cumulatively between October 2020 and September 2021. Since this equates to around 20% of total value added, these estimates suggest that euro area GDP would have been around 0.5% higher in 2021 had it not been for the supply bottlenecks. This estimate can be considered a lower bound, as supply bottlenecks continued to affect production in the last quarter of 2021, as well as having an impact on construction and business services. JEL Classification: C30, E32, F60

Suggested Citation

  • De Santis, Roberto A., 2022. "Sources of supply chain disruptions and their impact on euro area manufacturing," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2022:0008:7
    Note: 185689
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2022/html/ecb.ebbox202108_07~e6aad7d32f.en.html
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    Cited by:

    1. Egan, Paul & Kenny, Eoin & McQuinn, Kieran, 2022. "Increasing future housing supply: What are the implications for the Irish economy," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    Economic analysis; supply bottlenecks;

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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