Moreover, taking into account the existence of capacity constraints, the favourable momentum of real GDP growth observed over the past few quarters and the signs of a further tightening of labour markets, with labour shortages increasingly being mentioned in surveys as a source of concern in the industry and services sectors, suggests that stronger than currently expected wage developments may occur.
Eventually, the underlying imbalances erupted and suddenly came to the surface – with the well-known costs. The situation in which the global economy found itself was comparable to a rose bush that had sprouted too many new buds too quickly. The new rosebuds had many attractive blossoms but as soon as it started to rain, most of them had no support and broke off.