Crisis that “surpasses everything known so far”

Growing faith in government, major economic risks, out of control inflation – rarely has Clemens Fuest been so concerned about the state of the world economy. In the Handelsblatt interview, the Ifo boss explains what needs to be done to prevent the worst from happening.

High inflation rates, war uncertainty, ongoing supply chain problems and then the pandemic that has not been overcome: the global economy is in an exceptional situation. Has there been a situation like this before in the past few decades?
Energy price shocks are often triggered by or accompanied by geopolitical conflicts. An example is the 1973 oil price shock and the Yom Kippur War in the Middle East or later the Iraq wars. However, supply chain problems are more serious today due to the more interconnected global economy. Today, around 80 percent of industrial companies in Germany say they have problems sourcing primary products. In the previous three decades, the peak was 20 percent. So we are in a crisis, at least as far as supply chains are concerned, that surpasses anything known so far.