The global economy stands to lose a low $5.8 trillion and as high as $8.8 trillion — equivalent to 6.4 percent to 9.7 percent of global output measured as the gross domestic product (GDP) — as a result of the COVID-19 pandemic, the Asian Development Bank (ADB) said on Friday.
In a report titled Updated Assessment of the Potential Economic Impact of COVID-19, the Manila-based multilateral said economic losses in Asia and the Pacific could 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 percent 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.
In Southeast Asia where the Philippines is lumped, the output loss was seen at a low $163.2 billion to as high as $252.9 billion equivalent to 4.6 percent of regional gross domestic product (GDP) up to 7.2 percent of GDP.
But because governments in the region put up intervention measures to help contain the spread of the pandemic, the economic loss may have been limited to a low $119.6 billion to no more than $166.3 billion equal to 3.4 percent of regional GDP up to 4.7 percent of GDP.
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, the ADB noted.
Sustained efforts from governments focused on these measures could soften COVID19’s economic impact by as much as 30 percent to 40 percent, according to the ADB report. This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
The analysis, which uses a Global Trade Analysis Project-computable general equilibrium model, covers 96 outbreak-affected economies with over 4 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 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. “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.”
ADB’s COVID-19 Policy Database provides detailed information on the key economic measures that ADB members are taking to combat the pandemic.
Under the short and long containment scenarios, the report 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 percent of total employment losses. Labor income around the world will decline by $1.2 trillion to $1.8 trillion — 30 percent of which will be felt by economies in the region, or between $359 billion and $550 billion.