BIS research highlights macroeconomic risks from geopolitical chokepoint disruptions

BIS research indicates that rising geopolitical tensions, including trade restrictions and conflicts, are disrupting global supply chains at critical chokepoints. While strong substitution effects and inventory use mitigate adverse output effects, these disruptions often lead to higher input prices. Effective policy responses must be tailored to the disruption's cause, centrality, and the private sector's capacity to substitute or utilize buffers.