COVID-19 outbreak to have significant economic impact on developing Asia-ADB
View(s):MANILA, PHILIPPINES — The ongoing novel coronavirus (COVID-19) outbreak will have a significant impact on 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, according to a new analysis by the Asian Development Bank (ADB) released on Friday.
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 US$77 billion to $347 billion, or 0.1 per cent to 0.4 per cent of global gross domestic product (GDP).
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 $156 billion, or 0.2 per cent of global GDP. China would account for $103 billion of those losses—or 0.8 per cent of its GDP. The rest of developing Asia would lose $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.”
The analysis, “The Economic Impact of the COVID-19 Outbreak on Developing Asia”, presents full details on the scenarios considered. It also presents estimated impact on individual developing Asian economies—and on sectors within these economies—including under a hypothetical “worst case” scenario for a given economy in the event of a significant outbreak. These should not be interpreted as predictions that an outbreak will occur but are meant to provide guidance for governments as they consider appropriate responses.
ADB’s response to COVID-19 to date includes $2 million announced on February 7 to enhance detection, prevention, and response in China and the Greater Mekong Subregion; another $2 million announced on February 26 to support response in all its developing members; and a CNY130 million ($18.6 million) private sector loan, signed on February 25, to Wuhan, China-based pharmaceutical distributor Jointown Pharmaceutical Group Co. Ltd. to support the continued supply of essential medicines and personal protective equipment.
ADB 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.