03 June 2020

Gradual easing of lockdown better for global supply chain, study suggests

03 June 2020

Easing coronavirus lockdown measures over a 12-month period will minimise the impact on the global supply chain compared to lifting restrictions quickly, new research suggests.

The study, led by University College London (UCL) and Tsinghua University in China, assessed how the world’s economy could be affected by Covid-19 lockdowns.

It found that a gradual easing of restrictions – rather than lifting them over a two-month period and introducing a second lockdown in January next year – would be “less disruptive” for the global supply chain.

It also suggests that stricter lockdowns implemented over a shorter period of time were “economically preferable” to more moderate measures imposed for four to six months.

The peer-reviewed study, which was published on Wednesday in the scientific journal Nature Human Behaviour, said businesses can “absorb the shock” of a brief lockdown better by relying on reserves.

Coronavirus – Tues Apr 7, 2020 (PA Wire)

Lead author Professor Dabo Guan said: “While predicting the true cost of lockdowns is not possible at this stage, our research suggests that shorter, stricter lockdowns minimise the impact on supply chains, while gradually easing restrictions over the course of a year may also be less disruptive than a swift lifting of restrictions followed by another lockdown.”

Looking ahead to a potential second wave of restrictions, researchers found that a globally co-ordinated lockdown for two months would be less economically costly than having measures take place across the world at different times.

The study said a co-ordinated lockdown would lead to a potential economic loss to global supply chains of 50%, rather than 60%.

Prof Guan, from UCL and Tsinghua University in Beijing, said: “Companies will survive the supply chain failures that lockdowns cause by relying on reserves of stock or finding new suppliers.

“If a second shock hits, reserves may be low and supply chains only recently repaired – making a new break much more costly.”

The study said the cost to the UK’s economy would increase from a potential supply chain loss of 38% – if lockdown measures were eased over 12 months – to 57% if a second wave of global lockdowns occur at different times.

Researchers found the most important factor affecting the global cost of lockdown measures was the number of countries that implemented them.

Co-author Professor D’Maris Coffman, from UCL Bartlett School of Construction and Project Management, said: “In preparing for the next pandemic, a global facility, in all likelihood administered by the International Monetary Fund, could ensure that the costs of containing an outbreak are not borne by one country alone.

“This would remove some of the disincentives to early action and provide enormous health and economic benefits over the long term.”

The study, which modelled the impact of lockdowns on 140 countries, also found that those not directly affected by the coronavirus outbreak could lose more than 20% of their GDP due to reduced consumer demand and bottlenecks in supply chains.

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