The coronavirus pandemic that has spread across the globe has triggered a massive healthcare crisis. But it has also severely affected the global supply chain network, leaving countries and companies alike scrambling to source the raw materials and components to supply struggling economies.
Professor Alexis Antoniades, Associate Professor and Director of International Economics at GU-Q, a QF partner institution, says that countries that instituted risk-mitigation strategies before the crisis are going to see economic benefits now.
“Countries that rely heavily on raw material from China will be affected the most, while countries that have diversified sources will not suffer as much. But supply chain disruptions are not the only concerns for countries. Countries that have weak healthcare infrastructure, rely heavily on tourism, and are not financially able to undertake significant fiscal stimulus will be hit hard,” Professor Antoniades said.
In that regard, he added, the blockade has been a blessing in disguise for Qatar, spurring a shift to self-reliance that gave rise to the manufacture of many products that it previously didn’t. “In less than three years since the launch of the Gulf Crisis, the nation’s manufacturing sector has boomed. Last week we were out of hand sanitizer, but now shops are fully stocked with locally produced bottles. That’s the impact of ‘made in Qatar’.”
While these strategies have strengthened the nation’s resilience in the face of the crisis, Antoniades explains, Qatar is still susceptible to the global economic slowdown and drop in the Liquefied Natural Gas (LNG) market, a cornerstone of Qatar’s economy. “Qatar is very much part of the globalized economy, which relies heavily on people and material moving in and out of the country – and that has been disrupted. Yes, Qatar produces its own goods, but the production of many final goods still depends on raw material, most of which, come from Asia. There is a big concern there.”
The economic silver lining for companies remains hard to see, he adds. “I don’t see how industries can benefit but I think there are some individual companies that can benefit. For example, if you are the maker of Clorox, this is a good time for your company.”
Global stock markets also reflect the uncertainties of the new economic reality. “People may think that playing it safe means getting out of the market, so, you will see a lot of selling in the market.”
With an anxious public unsure of what the future holds, Antoniades predicts that the government’s handling of the unprecedented pandemic will play a large role in shaping public perception of the crisis.
“I think Qatar has done an excellent job in dealing with coronavirus. First, they are inspiring confidence through reassuring messages and actions. They are transparent, decisive in their actions, clear, and quick to act.