Why the global chip shortage is a good sign for the world economy
- Demand for semiconductors is growing as world economic activity recovers. A combination of stronger recovery and inflation shows the global economy is returning to some semblance of normality
They may seem like small fry but they make our world go around. Whether in Tesla cars, toasters or tumble dryers, computer chips are so integral to our daily lives that, without them, our world would grind to a halt.
The OECD reports that inflation in the major economies rose to 2.4 per cent in March. Inflation is coming back, but it’s not the bogeyman that markets need to fear. Higher prices are a sign of economic vitality, of which the world has been in short supply since the Covid-19 crisis began.
The pandemic may be far from over, but the combination of stronger recovery and inflation shows the global economy is returning to some semblance of normality.
Now, chip producers are playing catch-up, trying to keep pace with the surge in global demand for semiconductors as world economic activity bounces back.