(Yicai Global) Nov. 30 -- Commodity prices could increase beyond expectations next year, despite an easing of shortages, according to the chief economist at China International Capital Corporation, a leading Chinese investment bank.

Commodity supplies this year have been greatly impacted by the ongoing coronavirus pandemic, geopolitical conflicts, congestion at ports, container shortages, and carbon neutrality efforts, Peng Wensheng said in an interview with Yicai Global.

Next year, rising raw material prices will probably limit downstream demand, Peng said, as it will be hard for demand to maintain high growth in the post-pandemic recovery period. But the recovery in upstream output is likely to continue and the shortage of bulk commodities will let up, he added.

The Covid-19 death rate has fallen significantly due to vaccinations, social relief efforts, and aid over the past year, Peng said. Society has been speeding up the return to normality, which is likely to prompt a rebound in capital expenditure around the world and so lift commodity prices beyond expectations, he said.

In the long run, global economic supplies are affected by three factors, Peng noted. The demographic dividend has already peaked, and major economies are facing stronger supply constraints which will lead to inflation and rising interest rates.

Second, carbon neutrality goals require the use of fossil fuels to be curtailed. If alternative energy sources cannot scale up fast enough, fossil fuels will be in short supply, which will result in stagflation in the economy.

And third, the whole world is reflecting on the stability and safety of the industrial chain, and the restructuring of the global chain is likely to push up production factors and economic operating costs, Peng said.

Editor: Futura Costaglione