The rising prices of the Energy will increase business costs and narrow profit margins for businesses around the world, said on Wednesdaya management consultant.
The prices of energy commodities, including oil, natural gas and coal, have skyrocketed in recent weeks. because supply remains tight and demand is rebounding after a slowdown induced by Covid. This has contributed to the electricity and fuel shortages of the Europe at "l ' Asia .
"This is " a big problem for companies. It will reduce their profit margins because as input costs increase, the question is how quickly can they increase their selling price ", Richard Martin, managing director of IMA Asia, told CNBC Squawk "Box Asia .
Corporate profit squeeze is likely to come in the fourthQ1 of 2021 and Q1 of 2022, said Martin, who advises senior executives in charge of Asia-Pacific operations at large global companies.
The "price increase of the Energy has coincided with supply chain disruptions and a shortage of shipping containers, which have contributed " to a rapid rise in inflation.
India and China could be at risk
Businesses in the United States have a better chance of protecting their profit margins thanks to a "very buoyant" consumer market, Martin said, adding that this would allow them to quickly increase selling prices.
But those in other countries face a bleaker outlook. , said the consultant.
"In many countries around the world, we don 't have such a vibrant consumer market. China i In fact, much of East Asia is located in that region. And as costs rise, profit margins shrink, "Martin said.
India is also at risk. Martin noted that the Indian stock market is in a state of tear, but the South Asian country is struggling to pass the costs on to consumers.