Global supply chains and European economic vulnerabilities

Supply chain disruptions are an increasing source of inflationary pressure and macroeconomic volatility in Europe. Recent events, such as the COVID-19 pandemic and the wars in Ukraine and Iran, show how global disruptions can rapidly spill over into prices and output within the EU. Although supply chain disturbances are not new, the growing interconnectedness of production networks and the recent rise in geopolitical tensions have increased supply chain risk. Disruptions in specific intermediate inputs or critical raw materials can trigger large, persistent and unevenly spread inflationary effects. They can also create adverse and uneven effects on economic output, complicating macroeconomic stabilisation through monetary and government policy.

This study takes two complementary angles: it quantifies macroeconomic effects once global disruptions materialise, and it maps product-level vulnerabilities that indicate where future disruptions may arise.