Global GDP may lose $77-347 billion due to coronavirus, Asia to be hit significantly : ADB
The coronavirus outbreak has the potential to significantly harm the Asian economies, and the global economy may suffer losses of USD 77-347 billion, Asian Development Bank (ADB) said on Friday. The virus outbreak may impact developing Asian economies through numerous channels, including sharp declines in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions, and health effects, ADB said, citing a new analysis done by it.
"The magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain. The range of scenarios explored in the analysis suggests a global impact in the range of USD 77-347 billion, or 0.1-0.4 per cent of global gross domestic product (GDP), it said. "In a moderate scenario, where precautionary behaviours and restrictions such as travel bans start easing three months after the outbreak intensified and restrictions were imposed in late January, global losses could reach UD 156 billion, or 0.2 per cent of global GDP," as per ADB's analysis.
China would account for USD 103 billion of those losses, or 0.8 per cent of its GDP. The rest of developing Asia would lose USD 22 billion, or 0.2 per cent of its GDP. "There are many uncertainties about COVID-19, including its economic impact," said ADB Chief Economist Yasuyuki Sawada. "This requires the use of multiple scenarios to provide a clearer picture of potential losses. We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak," Sawada said.
The Manila-headquartered multi-lateral funding agency had in February announced USD 4 million assistance for Asian countries to fight the deadly virus, that has claimed over 3,000 lives globally. The ADB analysis takes into account various scenarios considered, estimated impact on individual developing Asian economies, the sectors within these economies including a hypothetical "worst case" scenario for a given economy in the event of a significant outbreak.
ADB said the analysis is meant to provide guidance for governments as they consider appropriate responses. On February 7, it had announced USD 2 million support to enhance detection, prevention, and response in China and the Greater Mekong Subregion followed by another USD 2 million on February 26 to support response in all its developing members. Besides, a CNY130 million (USD 18.6 million) private sector loan was signed on February 25, to Wuhan-based pharmaceutical distributor Jointown Pharmaceutical Group to support the continued supply of essential medicines and personal protective equipment.
ADB also said it stands ready to provide further support to its developing members in their efforts to respond to the adverse impact of COVID-19. "ADB will use appropriate means to address the identified needs including through existing and new financial assistance, emergency assistance lending, policy-based lending, private sector investment, and knowledge and technical assistance."
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