Aliasghar Zargar told the Strategic Council on Foreign Relations that the impacts of Covid-19 on international commerce and trade shall be long term, adding that it would take almost six years for the global economy to recover and becomes international again.
He said the spread of the coronavirus has made international trade and commerce, especially manufacture, export and import sectors so vulnerable that the chains linking manufacturing to international trade and economy have been shattered.
Countries moving towards manufacturing nationalism
Zargar said many countries have reached the conclusion that they need to localize production and manufacturing sectors to minimize the impacts of Covid-19 on their economies.
‘’Many countries understand that it is now impossible to feed and loop this chain weekly or monthly and that they should move towards nationalism in production and manufacturing and complete the chain of production at home; therefore, I believe that international commerce suffered the biggest loss in the global economy in all industrialized and semi-industrialized countries, causing major disruptions in the chain of production and manufacturing. This has also affected other economic sources in the world. ‘’
Referring to the multi-faceted dimensions of the world’s economy affected by coronavirus, he said some countries that had adopted specific economic tendencies suffered the strongest impact.
‘For example, in countries such as Turkey, the United States, Spain and China where tourism and hospitality industry are amongst the main contributors to the economy, people suffered massively from the outbreak of Covid-19. In Iraq, an important part of the economy was dependent on the arrival of pilgrims who were prevented to visit and this resulted in considerable losses especially in Karbala City where more than sixty thousands people lost their jobs.’
International commerce disintegrated
Zargar said some other industries such as air transport which are related to tourism have been also affected by the outbreak of Covid-19 which also resulted in reducing demand for consumption of energy in the world.
‘This chain has been totally disrupted across the world and this has resulted in the reduction of the gross domestic product of the countries. Consequently, global economic growth has declined and it seems international commerce has been disintegrated.’
He added that passenger cruise in some countries such as Turkey have been dismantled as there is no customer and demand and the tourism sector is experiencing a recession.
‘We had 70 million tourists in Spain last year but it has reduced by 60 per cent during the pandemic. You can imagine the extent of economic loss for such countries whose economies are heavily dependent on tourism. What is worse is that it is not yet clear when this outbreak is going to end. It may last for a long period.’
This analyst of economic politics referred to the projections of the International Monetary Fund that has foreseen China not only to be exiting negative economic growth and recession but also its gross domestic product is going to improve.
Zargar added that under such circumstances, countries that are able to properly manage this disease would experience better economic conditions in the future with fewer losses. He said South-East Asian countries have been able to control the disease and have therefore incurred minimum economic damages.
Proper control of Covid-19 and economic success
Zargar said controlling coronavirus means managing the economy and experiencing economic success and improvement in the manufacturing and occupation sectors.
‘Countries that have failed to control Covid-19 have less money for trade and earned less income and are therefore desperate to increase tariffs. They are seeking to resort to domestic production and complete the chain of manufacturing domestically without resort to abroad and fight economic war,’ he said, adding that under such conditions, even countries such as China that claim to have no loss in terms of national production and have registered positive growth, need to export their products.
Zargar said China earns 300 billion dollars in trade every year.
‘If countries have become poorer as the result of the outbreak of the Covid-19, they need to consider and resort to domestic production and industries and try to increase tariffs on imported products. China has no choice but to dump its excess products into the sea or sell them at very low competitive prices; therefore, China has not benefitted much from controlling the Covid-19 as the economy of China is heavily dependent on the global economy.’
Global economic recession would impact China as well
This expert of international economic affairs pointed to other dimensions of global economic chaos caused by the Covid-19 pandemic and said when the chain of recession is developed, the global economy will recess and we face fewer imports and less purchase.
‘Therefore, countries that claim to have experienced less economic damages during the pandemic will find no destination for their exports. China’s economic prosperity as the driving engine of the world’s economy happened when the whole globe was experiencing economic growth; however, should this progress end in recession, China too will suffer and therefore this global engine can no longer drive like the past’.
Zargar said the escalation of tension between China and the United States should be blamed on the present chaos in the global economic condition, adding that many analysts believe that the US economy needs at least one year to recover.
‘But many other analysts believe that the recovery of the US economy shall take one decade; this means when 60 million Americans become jobless as the result of the outbreak of coronavirus, some of them can only return to their jobs in one year but this is only related to small and medium-size enterprises. And factories which have closed down during Covid-19 pandemic, and products whose completion of the chain of manufacture is time-consuming shall take years to recover.’
Zargar said many countries are currently making efforts to rely on nationalism and domestic production and therefore would not return in future to the previous procedures, adding that ‘therefore, the impacts and consequences of the outbreak of Covid-19 would be lengthy considering the recent developments in the international commerce and trade’.
He said it may take at least six years for the global economy to recover.