Impacts of COVID-19 on Global Value Chains

We investigate the impacts of COVID-19 on global value chains by examining bilateral trade in finished machinery products from January to June in both 2019 and 2020. We use the numbers of COVID-19 cases and deaths as measures of the impact of the pandemic. Specifically, we investigate how these impacts affect value chains in three scenarios-countries that import finished machinery products, countries that export finished machinery products, and countries that export machinery parts to countries exporting finished machinery products-to assess the impacts on demand, output, and supply chain, respectively. In our analysis, the largest negative impacts were from supply chain effects, followed by output effects. In contrast, we did not find significant impacts from demand effects. We also found that output effects are not so strong in intra-Asian trade compared with trade in other regions.