COVID 19 outbreak to have significant economic impact on developing Asia

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A new analysis by the Asian Development Bank (ADB), The Economic Impact of the COVID 19 Outbreak on Developing Asia, notes that the ongoing novel coronavirus (COVID 19) outbreak will have a significant impact on 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.

According to the analysis, the magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain. The range of scenarios explored in the analysis suggests a global impact in the range of $77 billion to $347 billion, or 0.1% to 0.4% of global gross domestic product (GDP).

In a moderate scenario, where precautionary behaviors and restrictions such as travel bans start easing 3 months after the outbreak intensified and restrictions were imposed in late January, global losses could reach $156 billion, or 0.2% of global GDP. China would account for $103 billion of those losses—or 0.8% of its GDP. The rest of developing Asia would lose $22 billion, or 0.2% of its GDP.

ADB Chief Economist Yasuyuki Sawada notes that there are many uncertainties about COVID 19, including its economic impact. According to him, this requires the use of multiple scenarios to provide a clearer picture of potential losses.

The analysis presents full details on the scenarios considered. It also presents estimated impact on individual developing Asian economies—and on sectors within these economies—including under a hypothetical “worst case” scenario for a given economy in the event of a significant outbreak.

Meanwhile, ADB’s response to COVID 19 to date includes 2 million U.S. dollars announced on February 7 to enhance detection, prevention, and response in China and the Greater Mekong Subregion; another 2 million U.S. dollars announced on February 26 to support response in all its developing members; and a CNY130 million ($18.6 million) private sector loan, signed on February 25, to Wuhan, China based pharmaceutical distributor Jointown Pharmaceutical Group Co. Ltd. to support the continued supply of essential medicines and personal protective equipment.

Established in 1966, the Asian Development Bank is owned by 68 members—49 from the region.

Source: Asia Plus