Which countries are hit most by the COVID-19 value chain shock?
In a study published by ING, reveals that in the context of COVID-19, Ireland now looks to be one of the most vulnerable economies.
The economic damage that Covid-19 inflicts on a country is not only driven by the government policies to stop the spread and ‘flatten the curve’ but also by disrupted supply chains and the impact on individual companies. These disruptions started even before countries went into lockdown and will continue after they are over.
Through this study, we learn that countries like Vietnam and Ireland are among the top five countries that have suffered most from falling production in countries with a lot of casualties. The difference between Asian countries like Vietnam, and European countries like Ireland, is that they have been hit at different moments in time.
The coronavirus crisis started in China so Vietnam and other Asian countries that are very dependent on Chinese inputs, like Singapore, Hong Kong, Malaysia, Thailand and Cambodia, were first to be hit through this value chain effect. Now that the virus has spread to Europe and is increasing in the US, the chart shows that countries like Luxembourg, Ireland, Hungary, the Czech Republic and Belgium are suffering through the input side of their value chains. Currently, 10 out of the 15 countries that are most exposed to shortages of supplies are European.
Furthermore, the study reveals that eight out of the 10 largest suppliers of world markets are also in the top 10 countries that have been hit most by the virus. By both measures, Luxembourg, Malta, Ireland, Vietnam, Singapore, the Czech Republic, Hungary and Slovakia are in the top 10 countries most affected by interruptions in the supply of intermediates of countries hit most by the virus. Of the 10 largest economies in the world, Canada stands out again as most vulnerable.
Read the full study here
