A regional institutional lender has revealed glimpses of the extent of the economic damage that the COVID-19 pandemic caused globally.
Asian Development Bank (ADB), a Manila-based financial institution, warned on Friday that the global economic impact of the novel coronavirus (COVID-19) could reach more than $4 trillion even as the virus continues to ravage the United States, Europe, and other major economies.
While the initial assessment showed that the damage was projected to be at five percent of the world’s total gross domestic product (GDP), the regional bank said that actual losses could be higher depending on the state of public responses to the virus.
It is important to note that the report only includes the immediate impact on tourism, consumption, and investments, and does not include side effects such as long-term effects on health care and education.
#ADO2020 NEWS: Economic growth in developing Asia will take a beating from the #COVID19 global pandemic. GDP will slow to 2.2% in 2020, but will rebound to 6.2% in 2021 once outbreak is contained – ADB Chief Economist @yasusawada
— Asian Development Bank (@ADB_HQ) April 3, 2020
Asian markets to take a big hit from the coronavirus
In their recently released report, the ADB mentioned that the overall growth of Asian economies would be reduced up to above two percent, down from their five and a half percent outlook back in September 2019. This marks the region’s slowest growth rate since the Asian financial crisis in 1998 when the overall growth rates were just under two percent.
The Southeast Asian and Pacific regions were projected to take the worst economic hits, while the South Asian region was expected to be able to get through the crisis relatively unscathed.
While inflation may generally increase across the region due to higher food costs, the outlook remains to be positive for 2021 with an accelerated growth rate of 6.2%.
Depending on the level of the public health response among the countries in the region, the extent of the damage could be reduced to $2 trillion.
The ADB report assumes that the coronavirus outbreak will be contained within this year and that life will go back to normal in 2021.
Hard realities regarding the novel coronavirus
“No one can say how widely the COVID-19 pandemic may spread, and containment may take longer than currently projected,” ADB chief economist Yasuyuki Sawada said.
With coronavirus cases breaching the 1-million mark, governments around the world have been releasing stimulus packages to bolster their respective economies.
The novel coronavirus pandemic hasn’t reached its peak yet, and that even with aggressive containment measures, there is still potential for further outbreaks.
This report provides policymakers around the world with a clearer picture of the economic scenarios that they are facing.
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