It is actually good news that the global economy is recovering from the effects of the pandemic faster than expected.

But the strong recovery has a dangerous side effect that could slow the upswing before it really gets going.

Because the boom is making raw materials and supplier parts scarce because the production and conveying capacities are still ailing after the lockdowns.

Mark Fehr

Editor in business.

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According to a study by the credit insurance company Euler Hermes published on Monday, companies are trying to fill their warehouses with hamster purchases in order to protect themselves from delivery problems.

This behavior is understandable from a business frog's eye perspective, but from a bird's eye view it exacerbates the macroeconomic scarcity and causes prices to rise.

Scarce transport capacities in international shipping

This can also be seen in the development that Euler Hermes expects for world trade. The economists expect the international trade volume to increase by 7.7 percent this year. This number refers to the amount of goods and services traded, not their value. According to Euler Hermes, the value of the trading volume will even grow by 15.9 percent, i.e. around twice as much as the volume. The reason for this is the price increases.

Why is that? On the one hand, the credit insurer refers to the scarce transport capacities of international shipping. According to the study, they account for 35 percent of the increases in value in world trade. The effect of supply and demand, on the other hand, is only responsible for 15 percent of the increase in value. The largest share of the rising prices, however, at 50 percent, is due to the increase in stocks. According to these figures, industrial hamstering is the main reason for the rising procurement prices.

In the race for scarce raw materials and parts from suppliers, European and German companies are apparently lagging behind. Deliveries of goods from Asia to the USA rose by 30 percent, while Asian exports to Europe only increased by 10 percent. That is probably because America opened the economy earlier. "Most European countries, especially Germany, are currently struggling to replenish their already low stocks," says Van het Hof, CEO of Euler Hermes in Germany, Austria and Switzerland.

A look at the automotive industry shows how the scarcity could affect consumers. Euler Hermes believes that the German car brands have great pricing power. In plain language: Manufacturers with coveted brands can easily pass the increased procurement costs on to end customers. "Due to the shortage of chips, the European and German carmakers are currently on the longer lever," says van het Hof. Price increases for cars are therefore possible - in Germany by 4 to 10 percent.

According to Euler Hermes, the automotive industry is already benefiting from the high demand for the reopening of the economy. According to a current study by the Ifo Institute, the automotive industry is one of the sectors that is suffering the most from the scarcity. Many cars cannot be produced due to the lack of semiconductors and computer chips. Some manufacturers therefore install the scarce chips mainly in particularly expensive car models and have the production grinded more cheaply.