LA CONSOLACION UNIVERSITY PHILIPPINES

City of Malolos, Bulacan 3000 | www.lcup.edu.ph

The Effects of COVID-19 to

International Trade

Submitted By: William Jefferson M. Homyao

BSBA-FM 2B

Submitted To: Dr. Rhoderick Sigua

International Trade and Business

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 INTRODUCTION

For weeks, journalists and researchers around the world have worked long
hours to provide rapid disclosure of information about the new coronavirus disease,
known as COVID-19, which is trying to help the public prevent infection while they
conduct dissemination of information on the disease to better understand the virus and
its potential effects on it. What was initially seen as a largely China-centric shock is now
understood to be a global crisis. The virus’s spread has regrettably borne out analysts’
downside scenarios, with investors digesting the implications of disrupted supply chains,
official containment measures, and spillovers from the real economy to financial
markets. Local, national and global economies are being negatively impacted by the
unpredictable nature of this pandemic. In addition to the direct damage it does to human
health, COVID-19 is sure to have an enormous economic impact. As we try to prepare
for that, let's look at what economists have learned from the damage done events that
occurred in the outbreak, the coronavirus outbreak is first and foremost a human
tragedy, affecting hundreds of thousands of people. It is also having a growing impact
on the global economy. This concept paper is intended to provide students and Teacher
with a perspective on the evolving situation and implications for the current situation of
our economy.

DISCUSSION

Early indications of COVID-19’s impact on the Chinese economy are worse than
initially forecast. Surveys of China’s manufacturing and services sector plunged to
record lows in February, automobile sales sank a record 80 percent, and China’s
exports fell 17.2 percent in January and February. The official data confirmed a
widespread slowdown in economic activity foreshadowed in low pollution levels and
depressed shipping traffic, among other informal barometers. Analysts have sharply
revised down estimates of Chinese growth, with many now predicting a drop in first
quarter GDP, the first contraction since China began reporting quarterly data in 1992.
As COVID-19 spreads, China’s economic recovery will be challenged as demand from
other countries drops as they cope with the virus. Where a stringent policy response is
deemed necessary, business will inevitably be impacted, with both near-term effects
and less-expected longer-run consequences.
 Travel restrictions and quarantines affecting hundreds of millions of people have
left Chinese factories short of labor and parts, disrupting just-in-time supply
chains and triggering sales warnings across technology, automotive, consumer
goods, pharmaceutical and other industries.
 Commodity prices have declined in response to a fall in China’s consumption of
raw materials, and producers are considering cutting output.
 The mobility and work disruptions have led to marked declines in Chinese
consumption, squeezing multinational companies in several sectors
including aviation, education abroad, infrastructure, tourism, entertainment,
hospitality, electronics, consumer and luxury goods.

Overall, China’s GDP growth may slow by 0.5 percentage points this year, taking at
least 0.1 percentage point off global GDP growth. This will ripple through developed and
emerging markets with high dependencies on China – be that in the form of trade,
tourism or investment. Some of these countries exhibit pre-existing economic fragilities,
others (acknowledging an overlap) have weak health systems and thus lower resilience
to pandemics. Many Asian and African countries lack surveillance, diagnostic, and
hospital capacities to identify, isolate, and treat patients during an outbreak. Weak
systems anywhere are a risk to health security everywhere, increasing the possibility of
contagion and the resulting social and economic consequences.

SUMMARY

China is the world’s second-largest economy and leading trading nation, so

economic fallout from COVID-19 also threatens global growth .Economists polled by
Reuters on March 3-5 said the outbreak likely halved China’s economic growth in the
current quarter compared with the previous three months. Data released on 16 March
showed China's factory production plunged at the sharpest pace in three decades in the
first two months of the year - something which could mean an even greater economic
slowdown than predicted in that poll. The shortage of products and parts from China is
affecting companies around the world, as factories delayed opening after the Lunar New
Year and workers stayed home to help reduce the spread of the virus.

CONCLUSION

Epidemics and pandemics are hence both a standalone business risk as well as an
amplifier of existing trends and vulnerabilities. In the longer run, COVID-19 may serve
as another reason – besides protectionist regulations and energy efficiency needs – for
companies to reassess their supply chain exposure to outbreak-prone regions. Beyond
standard concerns related to business operational continuity, employee protection and
market preservation, businesses and countries should take a fresh look at their
exposure to complex and evolving inter-dependencies that could compound the effects
of pandemics and other crises. Given the panic and neglect cycle of pandemic
preparedness, once COVID-19 is contained, much of the world is likely to return to
complacency and remain under-prepared for the inevitable next outbreak. Businesses
that invest in strategic, operational and financial resilience to emerging global risks will
be better positioned to respond and recover.

REFERENCES

https://www.weforum.org/agenda/2020/02/why-is-coronavirus-a-global-business-risk/
https://www.weforum.org/agenda/2020/03/coronavirus-and-corporate-social-innovation/
https://www.weforum.org/agenda/2020/02/coronavirus-economic-effects-global-
economy-trade-travel/