Page - 2 - of 13  At a global level, fully extended fiscal and monetary policies pushed recovery forward, with expansionary policies extended through 2021 and into this year. In tandem with a build-up of savings, aggregate demand expanded aggressively, eventually adding fuel to the fire of supply shortages, and giving fresh impetus to the inflation shock that currently besets the world economy.
The fiscal expansions and accommodative monetary policies that underpinned the 2021 recovery boosted demand for goods at a time when supply chains remained constrained due to COVID-19-related lockdowns. The pandemic-induced mobility restrictions meant that demand shifted from services to goods, exacerbating the demand-supply imbalance in the goods markets.