summer edition
Coronavirus shaking up Globalization The COVID-19 pandemic is now expected to trigger the worst economic downturn since the Great Depression. Many argue it could unravel globalisation altogether
Jun Du, Professor of Economics, Centre Director of Lloyds Banking Group Centre for Business Prosperity (LBGCBP), Aston University; Agelos Delis, Lecturer in Economics, Aston University Mustapha Douch, Research Fellow in Economics, Lloyds Banking Group Centre for Business Prosperity (LBGCBP), Aston University, and Oleksandr Shepotylo, Lecturer in Economics, Aston University
www.theglobalinvestor.com
G
lobalisation relies on complex links – global value chains (GVCs) – that connect producers across multiple countries. These producers often use highly specialised intermediate goods, or “inputs”, produced by only one distant, overseas supplier. COVID-19 has severely disrupted these links.
China plays a key role in this. According to Chinese customs statistics, the value of Chinese exports in the first two months of 2020 fell by 17.2% year on year, while imports slowed by 4%.
Although the global economy was fragile at the start of 2020, many hoped for increased international trade following the US-China Phase One trade deal. COVID-19 has
This drop in Chinese trade impacted some markets more than others. Comparative figures between the first two months of 2019 and the first two months of 2020 reveal a
scuppered those hopes, bringing the world’s factories to a standstill and severely disrupting global supply chains.
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