With great support by the National Natural Science Foundation of China (No.71988101 and 91846301), Professor Dabo Guan from Department of Earth System Science, Tsinghua University, in cooperation with scholars from World Bank and other international research institutes, have evaluated the short-term global supply chain effect of different COVID-19 containment measures in a quantitative approach. The paper entitled “Global Supply Chain Effects of COVID-19 Control Measures” was published in Nature Human Behavior on June 3, 2020. The link of the paper is: https://www.nature.com/articles/s41562-020-0896-8.

The COVID-19 pandemic has now spread to nearly every country in the world and has led to containment measures including travel restrictions, social distancing and shutdowns of commercial activities.

The paper uses a “disaster footprint” economic model to quantify the direct costs of lockdowns in terms of labor reduction as well as the cascading effects of loss of labor on the supply chain, simulating how constraints on output affect upstream suppliers as well as the firms to which the goods are being supplied. Supply chain data was drawn from the Global Trade Analysis Project (GTAP) database, which divides the world into 141 economies, with 60 sectors within each economy.

The research team developed 39 individual scenarios based on four sets of containment measures by using economic disaster model. The study found that early and strict lockdowns – such as the one imposed in China – are economically preferable to longer-period moderate lockdowns, as the duration of lockdown matters more to economies than the severity. This is because businesses can absorb the shock of a brief lockdown better by relying on reserves and shorter lockdowns cause less disruption to regional and global supply chains. The team also found that countries not stricken by the pandemic are also likely to suffer huge economic losses as a result of containment policies in affected countries and that low- and middle-income countries are particularly vulnerable to these indirect effects. Particularly at risk are the highly specialized economies, such as Caribbean countries that rely on tourism and Central Asian countries that rely on energy exports. Globalized industries that rely on difficult-to-replace suppliers are also vulnerable, such as automobile manufacturing, where production is estimated to fall by up to half.

The modelling of recovery scenarios estimated that gradual lockdown easing measures over 12 months would be an economically preferable option in minimizing impacts on the supply chain, while lifting restrictions quickly and then introducing a second round of lockdowns next January would increase the cost by one-third. Pandemics control has strong externalities; and no one can get a free ride. The economic losses derived from the impact on global supply chains can be minimized if we make collective efforts on COVID-19 mitigation in the current outbreak. Global collective efforts are required to eradicate the disease as well as minimize the economic impacts on national and global supply chains.

Fig. Economic impacts (value-added loss) of COVID-19 under different lockdown scenarios.