The lifting of COVID-19 restrictions in China could increase private consumption, boosting global trade, the Bank of Finland said on Tuesday.
According to the bank’s latest report, the contribution of private consumption to gross domestic product (GDP) shrank during the pandemic, but could now return to the pre-COVID-19 trend of growth. Since China is one of the largest economies in the world, this would have an important impact on the sectoral and geographical structure of global trade in the medium and long-term, the report said.
China has seen a notable increase in demand for food manufacturing, as well as in the agriculture, textiles, health care and travel services sectors, the report said.
Emerging Asian economies such as Cambodia and Vietnam, which export consumer goods to China, are therefore set to benefit the most in relative terms.
Although the United States and the Euro area could see a moderate decline in their value-added exports to China, the U.S. agricultural and food manufacturing sectors are set to gain from the shift.
Italy and France would gain from an increase in demand for food products, textiles, and leather products, as well as consumer chemicals. In addition, exports from Ireland and Spain to China could increase, boosted by demand for food products and other manufacturing and travel-related services, according to the report.
The report was carried out by the Bank of Finland Institute for Emerging Economies, the Bank’s research institute specializing in emerging economies.