The lifting of restrictions and, perhaps paradoxically, the current set of restrictions in China has contributed to bottleneck pressures in global supply chains. Businesses have found it challenging to meet demand as economies rebounded quickly once pandemic-related restrictions were lifted. China’s approach to tackling the pandemic is not going to ease those bottlenecks quickly.
Linked to the lifting of restrictions has been the increase in energy prices since the summer of last year which has had a significant impact on the euro area in view of its reliance on the imports of oil and gas.