The Economist Intelligence Unit and Badri Narayanan Gopalakrishnan
COVID-19 pandemic has put heavy downward pressure on demand and supply, disrupting supply chains around the world. Set under rising geopolitical tensions and populist politics, this report undertaken by the economist intelligence unit and commissioned by Huawei provides a scenario analysis of the increasingly ‘de-globalizing’ world. The scenarios are modeled using a computable general equilibrium model in the following manner- 100% tariffs on most sectors between China and the Five Eyes countries (Australia, Canada, New Zealand, the UK, and the US) due to rising political tensions; protectionism measures on essential products to stimulate domestic supply and efficiency in the recovery path post-COVID-19; and finally, taking into account the higher trade costs due to supply chain disruptions. Results highlight massive losses as a result of political decoupling compared to other scenarios. Countries integrated with global supply chains stand to lose heavily in comparison. This report reflects the need for a worldwide attempt to revive the multilateral trading system and push for greater efficiency in supply chains, starting with WTO reforms.
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