Economics in the Time of COVID-19
Value chains
When China’s production is disrupted, countries with strong value chain connections
with China will likely also be affected. This is a special concern for many Asian
countries, which have important value chain connections with China, but less likely
to be a concern for MENA countries, which have limited participation in global value
chains. However, disruptions to global value chains might exacerbate the depression of
oil prices caused by China’s weakening demand.
Tourism and travel
COVID-19 will likely reduce tourism from China to MENA in two ways. The first is
the pull factor: many MENA countries are now imposing travel restrictions to Chinese.
In addition, Saudi Arabia suspended entry of pilgrims to the holy sites, further reducing
tourism to the Middle East.6 The second is the push factor: economic slowdown in
China implies less tourists travelling to other countries, including MENA. East Asia
and Pacific is likely see the sharpest drop in Chinese tourists. The effect of economic
slowdown in China on tourist arrivals to MENA is expected to be more limited (see
Figure 3). However, the reduction of global travel will further depress oil prices.
Figure 3 Estimated impact of a decline in China’s per capita GDP on Chinese
arrivals to MENA and the rest of the world
Note: Excludes Hong Kong.
Source: Lopez-Cordova (2020a, 2020b).