Trade Impact of
Coronavirus for India estimated at $348 mn: UN Report
The trade
impact of the coronavirus epidemic for India is estimated to be about 348 million
dollars and the country figures among the top 15 economies most affected as slowdown
of manufacturing in China disrupts world trade, according to a UN report.
Estimates
published by United Nations Conference on Trade and Development (UNCTAD) on Wednesday,
4 March 2020 said that the slowdown of manufacturing in China due to the coronavirus
(COVID-19) outbreak is disrupting world trade and could result in a 50 billion dollar
decrease in exports across global value chains.
The most
affected sectors include precision instruments, machinery, automotive and communication
equipment.
Among
the most affected economies are the European Union (USD 15.6 billion), the United
States (USD 5.8 billion), Japan (USD 5.2 billion), South Korea (USD 3.8 billion),
Taiwan Province of China (USD 2.6 billion) and Vietnam (USD 2.3 billion).
India
is among the 15 most affected economies due to the coronavirus epidemic and slowdown
in production in China, with a trade impact of 348 million dollars. The trade impact
for India is less as compared to other economies such as EU, the US, Japan and South
Korea. Trade impact for Indonesia is 312 million dollars.
For India,
the trade impact is estimated to be the most for the chemicals sector at 129 million
dollars, textiles and apparel at 64 million dollars, automotive sector at 34 million
dollars, electrical machinery at 12 million dollars, leather products at 13 million
dollars, metals and metal products at 27 million dollars and wood products and furniture
at 15 million dollars.
Besides
its worrying effects on human life, the novel strain of coronavirus (COVID-19) has
the potential to significantly slowdown not only the Chinese economy but also the
global economy. China has become the central manufacturing hub of many global business
operations. Any disruption of China’s output is expected to have repercussions elsewhere
through regional and global value chains, UNCTAD said.
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 per cent reduction in output on an annual basis. This has come as a direct consequence
of the spread of corona virus (COVID-19).
The 2
per cent contraction in China’s output has ripple effects through the global economy
and thus far has caused an estimated drop of about USD 50 billion across countries,”
UNCTAD said. “The most affected sectors include precision instruments, machinery,
automotive and communication equipment, it added.
UNCTAD
said because China has become the central manufacturing hub of many global business
operations, a slowdown in Chinese production has repercussions for any given country
depending on how reliant its industries are on Chinese suppliers.
In addition
to grave threats to human life, the coronavirus outbreak carries serious risks for
the global economy, UNCTAD Secretary-General Mukhisa Kituyi said. Any slowdown in manufacturing in one part of the
world will have a ripple effect in economic activity across the globe because of
regional and global value chains, he said.
Pamela
Coke-Hamilton, who heads UNCTAD’s Division on International Trade and Commodities,
said for developing economies that are reliant on selling raw materials, the effects
could be felt very, very intensely.
Assuming
that it is not mitigated in the short-term, it’s likely
that the overall impact on the global economy is going to be significant in terms
of a negative downturn, she said.
The estimated
global effects of COVID-19 are subject to change depending on the containment of
the virus and or changes in the sources of supply.
Meanwhile,
the extent of the damage to the global economy caused by novel coronavirus COVID-19
moved further into focus as UN economists announced a likely USD 50 billion drop
in worldwide manufacturing exports in February alone.
Highlighting
the ongoing uncertainty surrounding the economic impact of the epidemic, in which
there have been more than 90,000 confirmed cases in more than 70 countries (the
majority in China) and over 3,000 deaths, Coke-Hamilton said that US measures in
terms of visitor arrivals, cancelling various meetings were having a knock-on effect
in terms of demand.
So right
now, we’re not clear on where it will go — a lot will depend on what happens with
COVID-19; if they are able to come up with a vaccine then hallelujah, hopefully
it will end very quickly, but if not, the impact can be severe, she said.