Global impact of Covid-19 could range from US$77b to US$347b: ADB

Cambodian workers outside a Chinese-operated factory in the Chinese-managed Special Economic Zone in Sihanoukville, Cambodia.
Cambodian workers outside a Chinese-operated factory in the Chinese-managed Special Economic Zone in Sihanoukville, Cambodia.
MARCH 06, 2020 - 6:03 PM

THE economic impact of the Covid-19 outbreak could range from US$77 billion to US$347 billion, or 0.1 to 0.4 per cent of global gross domestic product (GDP), according to analysis by the Asian Development Bank (ADB).

Some two-thirds of the impact will be borne by China, with the rest split roughly equally between developing Asia and the rest of the world.

The report, The Economic Impact of the COVID-19 Outbreak on Developing Asia, looks at a range of possible scenarios, noting that "the magnitude of the economic impact will depend on how the outbreak evolves, which remains highly uncertain".

Within the range of possibilities, the moderate case estimate is of a loss of US$156 billion or 0.2 per cent of global GDP. This is for the scenario where travel bans and precautionary behaviour abate three months after late January, compared with two months in the best-case scenario and six months in the worst-case scenario.

In this scenario, developing Asia excluding China would see a loss of US$22 billion or 0.24 per cent of the region's GDP.

The outbreak affects economies through many channels, including a fall in domestic consumption -- and possibly investment, if it hurts views on future business activity -- as well as declines in tourism and business travel.

The Asean countries where tourists from China accounted for more than a quarter of arrivals in 2018 are Myanmar (27 per cent), Thailand (28 per cent), Vietnam (32 per cent), and Cambodia (33 per cent). The report estimates a loss of US$19 billion to US$45 billion in tourism receipts for developing Asia excluding China.

The outbreak could also take a toll via trade and production linkages with China, which will be the case for the Philippines, Singapore, and Vietnam in Asean.

In the report's analysis, the impact is estimated to take the largest toll on the GBP of Cambodia -- more than 1 per cent even in the best-case scenario, and close to 3 per cent in the worst -- and Thailand, followed by Singapore, Vietnam, and the Philippines. Malaysia, Indonesia, and Brunei are expected to be affected to a similar and smaller degree, losing less than 0.5 per cent off GDP.

But the report noted that most developing Asian economies are already working to tackle the outbreak and undertaking supportive macroeconomic policies such as cutting interest rates or providing fiscal support.

The ADB is supporting members through finance, knowledge, and partnerships. This includes a US$2 million technical assistance grant to China and the Greater Mekong subregion.