MNI BRIEF: Supply Chain Disruption Impact On Output Limited

The effect of declining global value chain participation on overall potential euro area output would be of a limited magnitude, according a newly-released ECB Economic Bulletin box on the effects of persistent supply chain disruptions on output.

Both potential output and trend total factor productivity suffering a loss ranging from -0.1 and -0.3 percentage points, but should be seen in the context of expected trend total factor productivity growth of 2.1% between 2021 and 2023, according to the European Commission’s Autumn 2021 Economic Forecast. However some EA countries may be more negatively impacted on total factor productivity and potential output if trade turns out to be lastingly affected by the Covid-19 pandemic