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)—as a result of the novel coronavirus disease (COVID-19) pandemic, says a new report released by the Asian Development Bank (ADB) today.
The report, Updated Assessment of the Potential Economic Impact of COVID-19, finds that 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% 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.
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% 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.
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.
ADB is actively supporting its members as they address the effects of COVID-19 through its $20 billion response package announced on 13 April. The bank has approved a series of measures to streamline its operations for quicker and more flexible delivery of assistance.
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