The shock of the war in Ukraine and China’s zero-COVID policy continues to signal that the pandemic supply chain woes are far from being done.
“We have a huge supply shock with what’s going on with the war,” Citi Global Head of Public Sector Group Julie Monaco told Yahoo Finance (video above) at the 2022 World Economic Forum (WEF) in Davos, Switzerland. “So that exasperated things. … We have to remind people all the time: This pandemic is not over. Certainly in China, it’s very disruptive to the supply chains.”
China’s economic numbers continue to paint a grim picture amid the government’s policy aimed at eliminating coronavirus. Shanghai posted zero car sales last month as dealers were closed during the city’s sudden lockdowns, according to a statement from Shanghai Automobile Sales Trade Association.
Companies across industries are trying to get a handle on when supply chain logjams will improve — but that’s been a moving target. Both Walmart (WMT) and Target (TGT) are experiencing a downside as the giant box retailers successfully navigated supply chain bottlenecks. Among the challenges, now, they are carrying higher-than-usual level of inventories.
And with excess savings from the pandemic, shoppers are moving toward travel and other activities outside of the home after two years of being restricted.
At the same time, consumers remain concerned about inflation.
Monaco noted that while “there certainly is a view that the inflation is very supply chain-oriented,” there is also an argument that “maybe developed countries should have moved faster in terms of the monetary actions.”
With U.S. Federal Reserve officials are steadily raising interest rates to slow the economy and curb inflation, Monaco added that “the debate is how to get that right in terms of the balancing act, in terms of having a soft landing and not creating a recession. So it’s not an easy question to answer.”
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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