Following the continuous shortage of semiconductor supply, the global economic growth is expecting a big slowdown and momentary inflations. The shortage of semiconductors is a critical damage to the global economy because the production of vast electronics in modern day society relies heavily on their supply: from electric vehicles, to touch-screen monitors, televisions and so much more. The supply of semiconductors is critical to varies of firms; however, producers of semiconductors prospect that the shortage of its supply is likely to continue for six months or more.
Economists of Goldman Sach predict that the shortage of semiconductors will result in prices of related goods surging up to 3%; such rise in price will lead to an even worse consequence of a 0.4% boost in inflation until the end of the year.
“Taken together, while we see relatively modest implications of the semiconductor shortage for GDP growth and the industrial sector, it represents another reason to expect core goods inflation to remain firm this year”, Spencer Hill, a Goldman economist said.
Another economist from TS Lombard, Rory Green writes “As the world becomes more interconnected, more automated and greener, each unit of GDP growth will contain a higher content of semiconductors. Integrated circuits are becoming the key commodity input for economic activity”.
The rise in demand for electric vehicles is one of the most significant factors of the shortage of semiconductors. Semiconductors are being referred by economists as “new oil”, for its impact in the automobile industry. The shortage of semiconductors, however, is halting the production of automobiles, slowing greener changes, internationally.
Yet, Hill also prospects for the shortage in the supply of semiconductors not to continue into 2022. Electrification of the automobiles are crucial for the prevention of carbon dioxide emissions. Governments around the world may want to subsidize producers of semiconductors and encourage them to make more for a greener society.
GAFL TOPNOTCH 