Port of Hamburg, Germany on November 14, 2019 (Photo: Reuters/VNA)

In its World Economic Outlook, published Tuesday, the IMF said global manufacturing activity has been slammed by shortages of key components such as semiconductors, clogged ports and a lack of cargo containers, and a labor crunch as global supply chains optimized for efficiency have struggled to return to normal after pandemic-induced shutdowns last year.

Demand-supply mismatches have driven up prices, causing spikes in inflation. The IMF said it expects inflation to return to pre-pandemic levels next year, but warned that persistent supply disruptions risk unanchoring inflation expectations.

The report also warned of a dangerous divergence in economic prospects fueled by “the great vaccine divide,” with low-income countries, where 96% of the population remains unvaccinated, facing lower growth for longer periods, more poverty, and the prospect of de-anchored inflation expectations. Low-income countries need some 250 billion USD in additional spending to fight COVID-19 and regain their pre-pandemic growth path, the report said.