Covid-19: Gradual easing of lockdowns might benefit the global economy – Hindustan Times

Covid-19: Gradual easing of lockdowns might benefit the global economy – Hindustan Times

Owing to the coronavirus crisis, many countries across the world are under lockdown. A new study has revealed that a cautious approach to easing lockdown restrictions that reduces the risk of later lockdowns may be better for the global supply chain in the long run.

The study led by researchers at the UCL and Tsinghua University was published in the journal Nature Human Behaviour.

This is the first peer-reviewed study to comprehensively assess potential global supply chain effects of Covid-19 lockdowns, modelling the impact of lockdowns on 140 countries, including countries not directly affected by Covid-19.

The study found that stricter lockdowns imposed earlier – such as the two-month lockdown imposed in China – are economically preferable to more moderate lockdowns imposed for four or six months, as the duration of lockdown matters more to economies than their severity.

This is because businesses can absorb the shock of a brief lockdown better by relying on reserves and because shorter lockdowns cause less disruption to regional and global supply chains.

Researchers also found that countries not directly affected by Covid-19 may nonetheless experience large losses of more than 20% of their GDP due to fall in consumer demand and bottlenecks in supply chains.

Particularly at risk are open or highly specialised economies, such as Caribbean countries that rely on tourism and Central Asian countries such as Kazakhstan that rely on energy exports. Also vulnerable are globalised industries that rely on difficult-to-replace suppliers, such as automobile manufacturing, where production is estimated to
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