Global GDP may lose $77-347 bn, Asia to be hit significantly : ADB

Virus could wipe more than $200 bn off Asia Pacific economies this year: S&P

The COVID-19 outbreak has the potential to significantly harm the Asian economies, and the global economy may suffer losses of $77-347 billion, the 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, the ADB said.

The coronavirus outbreak has the potential to significantly harm the Asian economies, and the global economy may suffer losses of $77-347 billion, Asian Development Bank said on Friday. In a separate report, S&P Global Ratings said the outbreak could wipe more than $200 billion off Asia Pacific economies this year.

ADB said the 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. “The magnitude of the economic losses will depend on how the outbreak evolves. The range of scenarios explored in the analysis suggests a global impact in the range of $77-347 billion, or 0.1-0.4 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,” ADB said. 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.

S&P Global Ratings said, in a worst-case scenario, China could see growth of less than 3 per cent, while Japan, Australia, and Hong Kong could “flirt with recession”.

ADB Chief Economist Yasuyuki Sawada said: “There are many uncertainties about COVID -19, including its economic impact. 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 Manila-headquartered multi-lateral funding agency had in February announced $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 $2 million support to enhance detection, prevention, and response in China and the Greater Mekong Subregion followed by another $2 million on February 26 to support response in all its developing members.

Besides, a CNY130 million ($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.”

The coronavirus outbreak in China will not have much impact on the Indian economy, except in the worst-case scenario, according to the estimates made by the staff of the Asian Development Bank. However, the worst-case scenario is only hypothetical in nature

(As % of GDP)