Factors Increasing the Risk of Stagflation


Rising inflation. Geopolitical unrest. Supply chain issues caused by shifts in demand, labor shortages, and structural factors as well as evolving geopolitical stress.

All of these are ingredients that make stagflation a growing concern for the global economy. Some of the primarily affected sectors are metals and mining, chemicals, automotives, semiconductors and technology. Ongoing supply chain bottlenecks due to China’s strict lockdown policies and the conflict in Europe are causing rampant inflation and has the central banks struggling to maintain control by rising interest rates. The last time the economy was in this position was in the 1970’s. To recover, the US Central Bank and Federal Reserve tightened monetary policies extremely, which in turn raised interest rates. While this eventually proved a success in recovering the economy, it was a painful path to recovery, not just in the US, but in global poorer countries as well.

Atradius economists predict global GDP growth to slow in 2022 and 2023. Conversely, global inflation is expected to soar in 2022 but drop again in 2023. And commodity prices have risen, especially in the metals and food sectors.

What does this mean for businesses? Our latest economic outlook report breaks down how growing concerns of stagflation will impact businesses and economies around the globe.