'Growth inhibitors' cause headaches

The economy seems to be recovering unexpectedly quickly from the corona crisis. Economic growth forecasts have been revised upward, and the corona rush stops for most companies as of Oct. 1. However, severe labor shortages, high commodity prices and supply chain disruptions are inhibiting growth in almost all sectors.

A number of sectors will be back to the level they were before the crisis, such as manufacturing, technology, media and telecom and business services. At the same time, companies in many sectors face uncertainties that can make or break their growth,

These uncertainties are twofold. Many sectors are experiencing "growth pains" such as high commodity prices, disruptions in international supply chains and labor shortages that are more pronounced than before as sectors have reopened after a long time. These "growth inhibitors" are a direct result of the pandemic. Second, sectors are struggling with structural problems that predate the crisis, such as climate change and the aging population.

Growth in industrial sector breaks records

The differences between sectors are great. Industry is growing like never before, with the machinery industry in particular experiencing an unprecedented rate of growth. The downside is that more than a quarter of all industrial companies are facing major shortages of materials and labor, while more personnel are needed to meet demand.

In the TMT (technology, media and telecom) sector, there are a similar development for. Thus, digitalization accelerated due to mass home working, and the IT industry in particular grew strongly in the first half of 2021. However, also here of "growth inhibitors" such as the rapidly growing shortage of IT programmers and developers. The acute labor shortage is also occurring in other sectors that have found their way to growth, such as transportation and logistics, business services and construction.

Hospitality industry already running into limits to growth after fragile recovery

While the hospitality industry is still far from pre-corona levels, the industry is already experiencing "growing pains. For example, nearly 1 in 3 hospitality entrepreneurs consider staff shortages a major obstacle. In addition, there are fears that employees who went elsewhere during corona, no longer to returning to the hospitality industry. However, some of the labor shortage may be reduced. Thus, staff are likely to be "released at companies that without the government support might will topple over.

In the food sector, the opening of the hospitality industry provides for growth but are the labor shortages and high commodity prices cause for concern. Retail also faces "growth inhibitors. For example, physical stores remain vulnerable due to the strong growth of "online" in 2021.

Source: ABN AMRO