The Impact of COVID-19 on the Global Economy and Regional Integration

Darson Chiu

《Taiwan Strategists》 6期 (2020/06) Pp. 33-47

摘要

The spread of COVID-19 from Wuhan, China, to East Asia and the major part of global supply value chains, and then to the US and Europe, where the major market demand for finished products, has caused unprecedented and substantial impacts on the global economy. Many international forecasting institutes have aggressively revised downward their forecasts for 2020. As the demand for end products has rapidly decreased, and the oil producing nations have also failed to reach an in-time consensus, continuous tumbling crude oil prices could trigger the fear of deflation and have further the impacts. The economic damage caused by COVID-19 could be unparalleled; recession or even depression is inevitable, meaning that the economic outlook in the near future will be extremely pessimistic. Nearly 80% of Taiwan's exports in goods are intermediate products, namely parts and components; Taiwan is deeply integrated into the global supply value chains. For that reason, the global economic growth and Taiwan's growth are highly correlated, making the Taiwanese economy difficult to be totally immune from such unexpected shocks. If such a COVID-19 economic disaster is indeed dreadful, protectionism may arise as a result. Globalization and regional integration processes will be redefined. Therefore, it is expected that a paradigm-shift will take place in the form of restructuring existing supply chains. Nevertheless, the shift may provide Taiwan with certain opportunities in addition to challenges.

關鍵字

COVID-19 ； Global Supply Value Chains ； Economic Outlook ； Globalization ； Regional Integration