A recent report from the United Nations Conference on Trade and Development (UNCTAD) reviews the interrelated impacts of the ongoing coronavirus crisis (COVID-19) on global trade, especially its negative and direct  effects on supply chains due to global transport ,traffic restrictions and the suspension of commercial activities. It highlights the risks of reduced global trade movement caused by a decline in exports by the manufacturing sector in China, especially as Chinese production was affected by the preventive measures taken by the government to combat the spread of the virus.

The Ministry of Economy, in its review of the latest UNCTAD report, presented a summary of the key points highlighted in the report, the first of which is the economic repercussions of the coronavirus pandemic, talking exclusively about the direct impacts on foreign trade and shipping globally. In addition, it listed the top 20 countries in the world whose economies have been adversely affected by the decline in Chinese exports during the two consecutive months, January and February 2020. Furthermore, it addresses the pandemic’s impact on global value chains and the decrease in trade volume in countries affected by the decline of Chinese production and Chinese exports (supplies) with an estimated USD 50 billion drop in the volume of the exports across global value chains. The report explains  in details that manufacturing industries  and services sectors in China fell sharply in February 2020.

China has become of great importance to the global economy in the past two decades, according to its position as the main supplier of intermediate goods to manufacturers abroad, as global trade depends on the manufacturing of 20 per cent of their intermediate goods in China. The importance of the Chinese economy and its overlap with global economies have been indicated through the presentation of some graphic indicators such as: Director of Industrial Procurement, Shipping Indicators, GLI Index to measure the integration of every country and industry with the Chinese economy.

There is no doubt that the decline in the Chinese supply of intermediate goods will affect the production and export capacities of other countries whose industries depend on Chinese suppliers as input, this was refereed clearly by  stating for example  that some European car manufacturers will face a shortage of some basic components that are  needed for their products while Japanese companies will have also a difficulty to get  the needed parts  to assemble digital cameras, the same challenges as well with other countries in various industrial sectors .

For many companies, their dependence on short supply orders  when  are needed (Just in time inventory) will lead consequently to a shortfall in their production capacities , at the end impacting their overall exports negatively . More specifically, the UNCTAD report indicates that the most affected economies will be the European Union (machinery, cars, and chemicals), the United States (machinery, cars, and precision tools), Japan (machinery and cars), the Republic of South Korea (machinery and communications equipment), Taiwan (communication equipment and office machines) and Vietnam (communication equipment).

Trade Policy & International Organization Department 

Ministry of economy