During the last few months, an improvement in the world transport capacity index was observed, which in turn is reflected in a decrease in transport costs.
Although these costs showed an increase since the escalation of tensions between Russia and Ukraine.
Thus, according to the Financial System Stability Council (CESF) of Mexico, the observed levels still show a significant deviation from pre-pandemic levels.
World Transport Capacity Index
In 2021, the opening allowed an accelerated recovery in the consumption of goods and a recomposition of the demand towards intensive services in physical contact.
Added to this is the effect of the expansionary fiscal policies implemented by various economies since 2020.
The increase in demand was coupled with an imbalance in supply caused by interruptions in supply chains, labor shortages in some ports and factories due to Covid-19 infections, and increased shipping costs.
In this context, the general inflation of many countries exceeded the levels registered in the last decade.
Specifically, in its economic expectations for January 2022, the IMF estimated that annual inflation for 2021 for advanced economies was 3.9%, its highest level in 30 years, while in emerging economies it was 5.9%, its highest level in 10 years.
In order to understand the medium and long-term effects of the pandemic, given the complex nature of the Covid-19 shock, the CESF explained that it is important to consider that there could be an impact on the potential production level of the countries.
On the one hand, capital-intensive sectors could be more affected, since parts of the capital stock could soon become obsolete.
The case of the air transport industry stands out, which considerably decreased its operation in 2020 and has been gradually recovering.
On the other hand, post-recession public finance consolidation needs, combined with difficult corporate financial prospects, may contribute to a prolonged period of underinvestment.
In addition, the CESF considers that there could be a negative impact on potential GDP through labor supply.
From their perspective, the largest effect will be seen in labor-intensive sectors, such as accommodation and food preparation services, as well as entertainment and recreation services.
However, given the nature of the shock in question, which differs from a financial crisis, uncertainty prevails regarding the effects that could be observed in the medium term on activity and its impact on potential output.