Short, tight confinements have less impact on supply chains

The duration of containment measures by COVID-19 has a greater impact on global supply chains than the severity of the restrictions themselves, so losses would be less if shorter and more stringent ones were implemented.

This is revealed by a study published in Nature Human Behavior, led by Dabo Guan, professor at Tsinghua University (Beijing, China).

Global supply chains are the systems for the global production and distribution of goods and services, and since March 11, when the World Health Organization (WHO) declared the COVID-19 virus a pandemic, they have been affected by restrictions imposed in countries around the world.

The research found that relaxing containment measures -- travel bans, commercial activities and social interactions -- gradually results in fewer economic losses than doing so quickly, as virus outbreaks can occur and controls must be reintroduced.

Guan's team used an economic disaster model to quantify the short-term impact of different virus containment methods on global supply chains and analyzed how pandemic-related losses were distributed in these chains.

They modeled 39 individual scenarios based on four sets of contention scenarios, three of which analyzed the geographic spread of the virus, the duration of containment, and its stiffness, which meant that labor and transportation were reduced compared to pre-pandemic levels. The fourth set assessed the impact on supply chains as measures are relaxed and also considered the damage caused if restrictions are applied for a longer period of time or have to be re-imposed.

In the model of a two-month lockdown, which followed a stringency of 80% and had been implemented only in China, the supply chain impact was found to be 3.5% of global GDP, increasing to 26.8% if applied to the global scenario.

The same type of containment but extended to four months increased global economic losses from $20 to $22.7 trillion.

In addition, experts noted that countries not directly affected by the new coronavirus were also experiencing large economic losses as a result of containment policies in the most affected zones, while low- and middle-income nations were particularly vulnerable to the impact of the restrictions.

Based on the study of three recovery scenarios, the research concluded that relaxing the mandatory containment measures over a 12-month period (with a 20% decrease in labour and transport) results in lower losses than lifting the restrictions in an accelerated manner and with the risk of having to reintroduce them again.

As an example, they cited the US economy, which could suffer a 24.6% decline if the controls were gradually lifted over twelve months, while losses would reach 54.8% if they were lifted quickly.

This is why the researchers recommended that, in the face of a new pandemic, countries should coordinate to introduce shorter and stricter containment, as this could reduce overall losses by about 11%.