BAKU, Azerbaijan, Aug.11
By Leman Zeynalova – Trend:
The global demand for refined fuels will be 3.5 percent lower in 2029, than had the Covid-19 outbreak not occurred, Trend reports citing Fitch Solutions.
“On the one hand, this implies that much of the demand loss induced by the pandemic will be temporary in nature, with the heaviest losses having already been incurred. On the other hand, it also points to an impact that far outlasts the pandemic itself; more specifically, to permanent demand destruction,” reads the report released by Fitch Solutions.
The pandemic has exacerbated these latter trends, according to the company.
“In response to the coronavirus, our China analysts have cut their expectations for real GDP growth in the coming decade from an annual average of 5.5 percent, to 5 percent. The pandemic is also likely to accelerate trends towards rising protectionism and the localization of supply chains, as populist narratives gain ground and security of supply concerns come to the fore.”
The report says that fragmented supply chains will tend to be less efficient, implying a loss in productivity and higher costs.
“There are also various other channels by which Covid-19 may drag on future growth, including the current buildup in corporate and sovereign debt (and subsequent need to deleverage), market distortions stemming from unprecedented central bank interventions, rising social and political unrest and slowing policy reform momentum. The regional outlook is mixed,” said Fitch Solutions.
In 2020, few major markets will escape economic contraction or a decline in their demand for oil, according to the report.
“Nevertheless, the impacts of Covid-19 have varied considerably, reflecting both varying levels of exposure to the virus and differing responses to it. Overall, developed markets have incurred by far the largest declines in output and demand, in both absolute and relative terms. In part this reflects their deep global trade linkages, which have left them vulnerable to border closures and shrinking trade flows. In general, in order to contain the spread of the virus, they have also put in place more stringent lockdowns, imposing tighter restrictions on economic activity and domestic mobility.”
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