The Bank of Spain warns that the great blow of the supply crisis is yet to come

The biggest negative impact of trade bottlenecks and the fatal supply crisis will come in the coming year. The Bank of Spain calculates that it can reach up to nine tenths of GDP in 2022, around 11,000 million euros. More than 80% of Spanish companies also expect the biggest hit to come in the coming year.

If the economic forecasts for Spain this year are disappointing, 2022 may be even tougher. According to the analysis of the Bank of Spain, the greatest impact of the supply crisis will occur throughout 2022. For the institution this year, the negative consequences will only amount to 0.3% of GDP, about 3,700 million. The blow for next year may exceed 11,000 million, representing between 0.5% and 0.9%, as the negative effects are amplified.

The economists of the Bank of Spain take into account what the negative impact for the industry implies, but also the drag effect caused by the supply crisis for the national economy and the subtraction of the lower international demand.

The institution underlines the “significant disruptions” in global supply chains that have occurred in recent quarters and that “have conditioned the degree of dynamism in the recovery of activity in the main world economies.”

“One particularity of these bottlenecks is that they have affected the different branches of activity in a very heterogeneous way and have had a particularly important impact on those industries located in the highest parts of the value chain, that is, in those that supply goods that are used by other industries, “he says.

Thus, for example, it explains that the “strong mismatches” between supply and demand that have recently been registered in the semiconductor and integrated circuit industry have had “a very significant negative impact” in the automotive sector, where many manufacturers have been forced to halt or cut their production plans.

The Bank of Spain indicates that most of the adverse effect on Spanish GDP of these bottlenecks would be associated with the negative impact that these shocks have on the automobile sector. It, he adds, “is consistent with the high weight and relevance of this sector“in the Spanish economy. More than half of the negative impact in 2022 corresponds to the automobile sector.

The Bank of Spain has assumed that the duration of these disturbances in the supply chains is essentially maintained during the fourth quarter of 2021 and the first three quarters of next year. But he warns that there is “notable uncertainty” about the degree of persistence that these bottlenecks could present in the future.

Most Spanish companies think that the hardest is yet to come. More than 60% of the Bank of Spain Survey on Business Activity (EBAE) They believe the supply crisis will be worse in 2022.