Geneva, 4 March 2020 – Today, UNCTAD published a technical note entitled Global trade impact of the Coronavirus (COVID-19) Epidemic to evaluate the economic impacts.
Over the last two decades the People’s Republic of China become the world’s largest exporter and an integral part of global production networks. China has established itself as a key provider of inputs and components for many products, such as automobiles, cellphones, medical equipment, and more.
Over the last month, China has seen a dramatic reduction in its manufacturing Purchasing Manager’s Index (PMI) to 37.5, its lowest reading since 2004. This drop implies a 2% reduction in output on an annual basis. This has come as a direct consequence of the spread of corona virus (COVID-19).
The 2% contraction in China’s output has ripple effects through the global economy and thus far has caused an estimated drop of about US$50 billion across countries. The most affected sectors include precision instruments, machinery, automotive and communication equipment.
Among the most affected economies are the European Union, USA, Japan, Republic of Korea and Vietnam (See Table I).
Even if the outbreak of COVID-19 is contained mostly within China, the fact that Chinese suppliers are critical for many companies around the world implies that any disruption in China will be also felt outside the country’s borders, impacting European, American and East Asian regional value chains.
The estimated global effects are subject to change depending on the containment of the virus and or changes in the sources of supply.
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