Shipping crisis could push global inflation up, UN warns
The current global shipping crisis could push global inflation rates up 1.5 per cent, hindering the economic recovery.
A UN conference on trade and development (UNCTAD) report published today highlighted how the increased costs in container shipping have become a main issue for small suppliers, usually less equipped for absorbing additional expenses.
If the current surge in freight rates is to go on it will lead to import prices skyrocketing, impacting small islands developing states the most.
The report forecasts that global import price levels will on average go up by 11 per cent, but small island states could face increases up to 24 per cent.
“Higher shipping costs will also affect some low-value-added products: for furniture, for example, and textiles, garments and leather products, the consumer price uplifts could be ten per cent,” read the report. These increases could erode the competitive advantages of smaller economies that produce many of these goods.
“At the same time, these countries will find it more difficult to import the high-technology machinery and industrial materials they need to move up the value chain, diversify their economies and achieve the sustainable development goals (SDGs).”
“Even in major economies, lingering high container freight rates and disruption in maritime transport in the short- to medium-term threaten to undermine recovery.
“UNCTAD’s analysis concludes that in the United States and the euro area, for example, a 10 per cent increase in container freight rates could lead to a cumulative contraction in industrial production of around 1 per cent.”