NSW Treasury undertook research on global and domestic inflation trends that have occurred during COVID-19 and the implications for NSW. This briefing analyses the causes and impacts of the well-publicised issues with global supply chains. Key points include:
- Over the last few decades, increased globalisation has combined with the move towards ‘just-in-time’ inventory management.
- COVID-19 presented both a demand and supply side shock to global supply chains.
- The impact has been uneven across sectors. Crucially, critical industries, such as fertiliser and semiconductor chips, have struggled to meet demand.
- Looking ahead the outlook is for some supply chain pressures to ease over the course of 2022 as goods demand subsides from record levels, allowing for backlogs to clear.
