ProChile Report: Impact of COVID - 19 on World Trade

We make available commercial information and market trends reported by the 56 ProChile Commercial Offices in the world, in order to support decision-making that increases the resilience of the export sector and captures new opportunities.

Below, in this first newsletter, we present an overview of the impact of the health crisis on the world economy and trade. The information by geographic area is arranged in each one of the buttons and from the link you can download a document with all the files by market.

Significant impact on the world economy

If in 2019 world GDP registered its worst performance since 2009, with growth of 2,5%, for this year the most optimistic estimates - after the outbreak of the pandemic - predicted a 1,0% decrease in the growth rate of the world economy. However, as the health emergency has expanded, forecasts have cut expected growth.

In a context marked by uncertainty, according to Euromonitor, if the peak of the pandemic is reached in late May and between 1% and 10% of the world population becomes infected, global growth could reach between -1,5% and 0,5% in 2020.

International trade had already slowed in 2019, with a volume contraction of 0,1%, affected by trade tensions and the slowdown in economic growth. For this year, the World Trade Organization (WTO) foresees a reduction in world trade of between 13% and 32%.

COVID-19 is a shock to supply and demand

Among the countries most affected by the pandemic are: USA, China, Germany, UK, France and Italy, which represent 43,58% of world supply and demand (GDP); 57,2% of manufacturing production; 37,6% of world exports and 49,6% of Chilean exports. Supply and demand shocks in these countries will have global repercussions.

Secondly, the preventive measures implemented by governments will produce a significant slowdown in the aggregate demand of these countries, which will also have an impact on world trade. ECLAC has estimated a contraction in export demand from Latin America and the Caribbean of 21,7% to China, 7,1% to the US and 8,9% to the European Union.

Third, the manufacturing sectors of these most affected economies are central to various international supply chains. The supply shock in these countries is likely to create a contagion in the supply chain of much of the world. For example, China provides our country with 7% of intermediate inputs used to produce exports.

Featured opportunities

  • Strengthening of the eCommerce channel. The SARS outbreak in 2003 was a catalyst for eCommerce in China, generating a profound change in consumption patterns in that country. This contingency will have a similar impact. In 2019, 12% of older adults bought online in that country, while in February of this year that channel reached 87%. This habit is expected to continue in the future. On the other hand, the incorporation of small stores in online channels opens opportunities to compete in the future with the already established large eCommerce channels.
  • Increase in the digitization of the routine. Digital technologies have diminished the impact of the health crisis on some professions, education and certain medical care. This contingency will accelerate digitization processes in all areas, opening opportunities for creators of information technologies and services provided in digital form.
  • Increase in the consumption of goods linked to well-being. As countries assimilate social distancing, confined people prioritize "feel good", increasing the consumption, for example, of alcoholic beverages and facial care products, as has been observed in some Asian countries.


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