How Covid-19 has affected global exports
The Covid-19 pandemic has clearly affected the global economy and almost everything else from health to global exports and world trade. Its’ spread caused a serious threat to the macroeconomy and the production activities of almost all countries.
China, which is one of the largest producers in the world, experienced a substantially diminished output. This means that there was a significant decline in China’s production of goods - around 2 percent of the annual average.
Exports have dropped substantially since the start of the pandemic. In the past few decades, China was a major contributor to the global economy. Its’ importance in the global market was highlighted when their production of goods and exporting rate dropped.
China is one of the main suppliers of many manufacturing companies all over the world, and 20% of the world’s manufactured products come from this country. The disruption in their supply chain has adversely affected companies around the world.
On top of that, other countries have also faced a shortage in their oil supply and certain drugs. The wide range of approaches and measures implemented by governments to prevent the spread of Covid-19 included the prohibition of border crossings, total lockdown of all activities, and suspension of essential services.
In countries where there are strict mobility restrictions, a decrease in the availability of drugs is experienced.
For many companies, the Covid-19 pandemic has caused massive negative impacts on their production capability and overall trade. Shortage in inventories affected their just-in-time manufacturing process. Mobility restrictions and closed borders greatly contributed to the disruption of the supply chain of drug markets.
Generally, countries that are most exposed to Covid-19 and countries that acquire their supplies from China are the ones greatly affected. The impacted economies include the European Union, the United States, Vietnam, Taiwan, the Republic of Korea, and Japan.
Moreover, global energy market demands such as oil, coal, and natural gas have substantially declined as Covid-19 spread throughout the world. This decline in oil demand has been significant as oil is the main component in transportation. A sharp decline in local consumption could mean a possible decline in new ventures, tourism, business travels, and production bonds.
Although there is no certainty yet on the final impacts of Covid-19 to China and other economies, the most recent data significantly points to a recession. Many people have lost their jobs, small businesses closed, large businesses experienced bankruptcy, private institutions and organisations adjusted and had no choice but to not operate temporarily.
Due to Covid-19, even small to medium enterprises that manufacture and produce goods were not able to cope up with the pandemic, thus, decreasing the rate of products exported to other countries, affecting both channels and the economy overall.
With this, we can say that even though the outbreak was initially confined in China, the fact that the global market depends on a large scale on Chinese supplies, this indicates that any disruption in China’s supply chain, whether big or small, will automatically affect its exporting process and markets – American, European, and East Asian value chains.
Overall effects will still depend on how the economy will cope up and how the government will create additional measures towards the outbreak. Sources of supply may also be dependent on each industry’s intermediary exports.