According to the Asian Development Bankd, the global economy could suffer between $5.8 trillion and $8.8 trillion in losses—equivalent to 6.4% to 9.7% of global gross domestic product (GDP). The losses are estimated as a result of the novel coronavirus disease (Covid-19) pandemic.
In its report, Updated Assessment of the Potential Economic Impact of COVID-19, economic losses in Asia and the Pacific are estimated to range from $1.7 trillion under a short containment scenario of 3 months to $2.5 trillion under a long containment scenario of 6 months, with the region accounting for about 30% of the overall decline in global output.
“The People’s Republic of China (PRC) could suffer losses between $1.1 trillion and $1.6 trillion. The new analysis updates findings presented in the Asian Development Outlook (ADO) 2020 published on 3 April, which estimated Covid-19’s global cost to range from $2.0 trillion to $4.1 trillion,” ADB stated in its report.
The report also pointed out that sustained efforts from governments focused on relief measures could soften Covid‑19’s economic impact by as much as 30% to 40%, according to the report. This could further reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report includes transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of Covid-19’s global economic impact.
“This new analysis presents a broad picture of the very significant potential economic impact of Covid-19,” said ADB Chief Economist Yasuyuki Sawada.
He further added that report’s analysis highlights the important role policy interventions can play to help mitigate damage to economies. These findings according to him can provide governments with a relevant policy guide as they develop and implement measures to contain and suppress the pandemic, and lessen its impacts on their economies and people.”
ADB’s COVID-19 Policy Database provides detailed information on the key economic measures that ADB members are taking to combat the pandemic.
The report also notes that border closures, travel restrictions, and lockdowns that outbreak-affected economies implemented to arrest the spread of Covid-19 will likely cut global trade by $1.7 trillion to $2.6 trillion.
“Global employment decline will be between 158 million and 242 million jobs, with Asia and the Pacific comprising 70% of total employment losses. Labor income around the world will decline by $1.2 trillion to $1.8 trillion—30% of which will be felt by economies in the region, or between $359 billion and $550 billion,” ADB stated.
Apart from its $20 billion response package announced on April 13, the bank has also approved a series of measures to streamline its operations for quicker and more flexible delivery of assistance.