COVID-19 global economic impact could reach $8.8 trillion: ADB
Kathmandu, May 15
The global economy could suffer between $5.8 trillion and $8.8 trillion in losses — equivalent to 6.4 per cent to 9.7 per cent of global gross domestic product (GDP) — as a result of the novel coronavirus disease (COVID-19) pandemic, says a new report released by the Asian Development Bank (ADB) today.
The new analysis updates findings presented in the Asian Development Outlook (ADO) 2020 published on April 3, which estimated COVID-19’s global cost to range from $2 trillion to $4.1 trillion.
The new report titled ‘Updated Assessment of the Potential Economic Impact of COVID-19’ shows that economic losses in Asia and the Pacific could range from $1.7 trillion under a short containment scenario of three months to $2.5 trillion under a long containment scenario of six months, with the region accounting for about 30 per cent of the overall decline in global output.
China could suffer losses between $1.1 trillion and $1.6 trillion.
Governments around the world have been quick in responding to the impacts of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending, and direct support to cover losses in incomes and revenues. Sustained efforts from governments focused on these measures could soften COVID‑19’s economic impact by as much as 30 to 40 per cent, according to the report.
This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
The analysis, which used a global trade analysis project-computable general equilibrium model, covered 96 outbreak-affected economies with over four million COVID-19 cases. In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report had included 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,” ADB Chief Economist Yasuyuki Sawada has been quoted as saying in a media release. “It also highlights the important role policy interventions can play to help mitigate damage to economies. These findings 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.”
According to the report, global employment decline will be between 158 million and 242 million jobs, with
Asia and the Pacific comprising 70 per cent of total employment losses. Labour income around the world will decline by $1.2 trillion to $1.8 trillion — 30 per cent of which will be felt by economies in the region, or between $359 billion and $550 billion.
Apart from increasing health spending and strengthening health systems, strong income and employment
protection are essential to avoid a more difficult and prolonged economic recovery.
Governments should manage supply chain disruptions; support and deepen e-commerce and logistics for
the delivery of goods and services; and fund temporary social protection measures, unemployment subsidies, and the distribution of essential commodities — particularly food — to prevent sharper falls in consumption, the report says.
A version of this article appears in e-paper on May 16, 2020, of The Himalayan Times.