COVID-19 has reduced world exports by $ 50 billion in February alone, according to an analysis published today by the United Nations Agency for Trade and Development (UNCTAD).
China has lived weeks of semi-paralysis following the spread of the COVID-19 outbreak, identified in mid-January and that forced it to close factories and restrict the movement of people to contain the epidemic’s expansion from Wuhan, capital of the province of Hubei, to the rest of the country.
The result of these measures was a 2% drop in the production of China, mainly of inputs and components intended for the production of final products such as cars, mobile phones, medical equipment, among others, according to the estimates of the agency.
The Asian giant is responsible for 20% of the global production and trade of intermediate products, which makes this country an indispensable player in the world production chain, said the director of International Trade of UNCTAD, Pamela Coke-Hamilton.
The most affected by the loss of exports are the European Union (EU), where it is estimated that it was 15,000 million last month and the most affected industries have been machinery, automobile, chemical and precision instruments.
Japan and the United States have lost nearly 5,200 million and 5,800 million dollars in sales abroad, respectively, while Vietnam (2,300 million) and Taiwan (2,600 million) remain on the affected list.
The degree of integration of countries and industries with the Chinese economy, as well as their interdependence, are clear. If the reduction of supplies continues there may be an impact on prices, ”explained economist Alessandro Nicita.
From the analysis of the data of recent weeks, UN experts have concluded that beyond the majority of cases of COVID-19 remain in China, the fact that this country is an irreplaceable supplier for many companies makes the interruption or decrease of its production has a worldwide impact.
After what appears to have been the peak of the coronavirus epidemic in China and the sustained decline in cases in recent days, the industrial sector is gradually returning to normal and many plants are starting to produce again.
Of the almost 91,000 cases of coronavirus worldwide confirmed by the World Health Organization, more than 80,000 correspond to China.
Nicita said that in the short term it is very difficult to reduce dependence on the Chinese supply chain, since identifying new suppliers in other countries is a time-consuming task.
He added that, in addition to its production capacity, China’s strength is throughout the logistics system and transport infrastructure it has created to move its production outside and inside the country by land, air and sea.
Coke-Hamilton warned that if the epidemic is not controlled quickly, it is possible that its impact on the global economy will be stronger and that, in that context, developing countries will be the hardest hit.
The economic impact of the virus will depend on the measures that countries take to contain it and China has done a great job in this regard, although it has sacrificed its economy a bit with the closure of plants and the restriction of movement of people, all of which was necessary, but it has had a negative effect, he explained.