The Moody's Analytics expert said that the reason that global disruptions in the supply chain persist is China's policy to combat coronavirus.
"Supply chain problems are likely to ease in the first months of 2022, which in turn will reduce inflation in the producer sector and lower commodity prices. But do not forget about the risks from China - a zero tolerance policy for coronavirus can lead to the closure of important ports and factories, which will increase disruptions," said Catherine Ell, senior Asia-Pacific economist at Moody's Analytics.
Restrictions imposed by the Chinese government at the beginning of the pandemic have negatively impacted manufacturing and transportation operations around the world, exacerbating the supply chain crisis. Meanwhile, with the advent of the Omicron strain, there were concerns that the shipping sector would be under pressure.
"China's coronavirus policy increases negative risks for supply chains. Thus, there will be important consequences for inflation in the next couple of months," Ell noted.
Last week, Goldman Sachs economists revised their estimates of China's GDP growth for 2022 to 4.3% from 4.8% earlier, citing the fact that China may strengthen restrictions on business activity to combat the Omicron strain.
"Overall, China's coronavirus policy suggests that the economic recovery will be a bit bumpier, especially with regard to consumption. To support the economy, the Central Bank can inject liquidity and lower the interest rate," Ell added.