The world is going through difficult times, with drastic changes. As the pandemic begins to subside, the crisis becomes economic.
The pandemic will have had many repercussions. If the first and most obvious is obviously health, with a dramatic worldwide death toll which counts in millions of deaths, the world of industry has also been hit hard by the pandemic. If the year 2020 was finally “normal” enough for large companies who were able to count on large stocks to sell, now the reserves are empty and the factories are still not operating at full capacity, so to satisfy demand.
Direct consequence of this lack of raw materials: prices increase. As supply and demand are out of balance, prices are soaring at a record level this year, with inflation reaching 2.1% in September according to initial INSEE estimates. A record figure when we know that the European Union had always succeeded in keeping the euro below the 2% inflation mark.
Wheat, coffee, gas and electricity on the tightrope
According to the IMF, inflation is expected to be only temporary and peak at the end of the year before stabilizing in 2022. The first cause of this temporary rise in inflation is an explosion in energy costs (electricity, gas, oil). The price of gasoline at the pump or even heating gas has exploded in recent weeks, and the pandemic, although partly responsible for this crisis is not the only reason. Geopolitical tensions as well as the presence of a monopoly, especially for Russian gas in Europe, have pushed prices up to unprecedented levels.
Another product that worries are basic foodstuffs, such as wheat, which is suffering from a bad harvest year, like coffee or soybeans, the prices of which are also soaring. The Evergreen incident in the Seul Canal also delayed many deliveries which impacted all shipping for weeks.
Semiconductors: the rare commodity for example
If there is one product that is more lacking than the others, it is semiconductors. These small electronic devices are the basis of the composition of thousands of products, ranging from game consoles, to smartphones to cars. They are therefore an essential object for our Western way of life, which is very strongly penalized by this offer below expectations.
In addition to limited production, especially due to tensions between China and Taiwan, semiconductors are more in demand than ever. The successive confinements have had an extremely important impact on our way of working, and the establishment of the distance to bring homes to equip or re-equip themselves with computers. As a result of such a sudden surge in demand for semiconductors.
In addition to these materials already in short supply, other industries could be affected in the coming weeks or months. This is particularly the case for the materials needed for the building, which are already at the limit of failure and therefore delivery times are getting longer and longer. The textile industry is also being watched closely by economists who fear it will reach breaking point quickly.