On January 17, Schroders Global Investment published an article stating that the ongoing escalation of geopolitical tensions in the Middle East has been affecting the global supply chain. Ships traveling through the Red Sea towards the Suez Canal and major economies globally are facing severe delays in delivery of goods due to attacks by Houthi armed forces. Satellite images show that almost no ships are currently passing through the Red Sea, instead opting to take the longer route through South Africa to reach major ports in Europe, the US, and the UK. Prior to the disruption in the Suez Canal shipping, the Panama Canal also faced issues such as drought caused by climate change and changes in rainfall levels due to the El Nio phenomenon, resulting in a decrease in water levels. Meanwhile, the damp weather in Europe has led to high water levels in the Rhine River, a major shipping route in Germany. The global supply chain seems to be facing a storm. These issues serve as a reminder of the difficult experiences caused by supply chain problems during the pandemic. These factors may have led to a recent spike in inflation in financial markets, ultimately forcing central banks around the world to significantly raise interest rates. The financial markets are currently digesting expectations of significant interest rate cuts in Europe, the UK, and the US, estimated to begin in the first half of 2024. This brings up another question: will the new supply chain issues push inflation higher and force policymakers to reassess the economic outlook? This largely depends on how long the disruption in the Red Sea will last. As there are currently significant differences in the global economic environment, it is unlikely that the Red Sea issue will cause a significant increase in inflation. Firstly, market demand is weak at present. Initially, in response to supply chain disruptions during the pandemic, countries around the world implemented massive monetary and fiscal stimulus measures to boost their economies. However, global economic growth is currently slowing down. Schroders Global predicts that the global GDP growth rate in 2024 and 2025 will only be 2.5%. The Eurozone may already be in an economic recession, the UK's economic growth is weak, and economic activity in the US is cooling. Secondly, while market demand during the pandemic was focused on goods due to lockdown measures to curb the spread of COVID-19, consumption patterns have now balanced out. In fact, with the economic reopening, market demand in recent years has shifted back towards the service sector, causing a decline in global manufacturing. Thirdly, the global economic supply side has also significantly improved. Compared to the period of continuous lockdowns during the pandemic, production was at a standstill, but the current level of disruption is not as severe. While ships diverting through southern Africa may prolong delivery times, goods will still reach their destination. Therefore, it is unlikely that there will be a severe shortage of supply.