Cost of Coronavirus pandemic could reach almost 10% of world’s GDP: Report
The cost of the coronavirus pandemic could reach as much as $8.8 trillion, or almost 10% of global gross domestic product, depending on how long the outbreak continues and the strength of government responses, according to the Asian Development Bank.
A shorter containment period of three months coupled with strong policy measures could limit the impact to $4.1 trillion, or 4.5% of world output, the Manila-based lender said in a report Friday. The Asia Pacific region is expected to account for about 30% of the overall decline in global output, it said.
The analysis “highlights the important role policy interventions can play to help mitigate damage to economies,” ADB Chief Economist Yasuyuki Sawada said in a statement.
The new cost estimates are more than twice the range of $2 trillion to $4.1 trillion the development bank gave April 3. There are now more than 4 million confirmed cases of coronavirus globally with deaths exceeding 300,000.
The lender suggests boosting health systems, as well as income and employment protections, to avoid an even more difficult recovery. Sustained measures from governments could soften the economic impact of the virus by as much as 40%, ADB said.
Between 158 million to 242 million jobs could be lost globally, with 70% of those in Asia and the Pacific, according to the ADB. The region accounts for a bigger share of job losses as its manufacturing sector remains labor intensive, James Villafuerte, a senior economist at the ADB, said in an interview Friday with Bloomberg TV’s Haslinda Amin and Rishaad Salamat. In China, as many as 95 million jobs could be lost, he said.While manufacturing and hospitality industries will be hit hardest, skilled workers in other sectors could also see temporary job displacement, Villafuerte said.
As consumption and investment declines, wages will drop globally, particularly in the U.S. and Europe, chief economist Sawada said separately in an online briefing Friday.“This is a health risk and not driven by fundamental economic problems,” Sawada said. “Smart health policies and containment policies are really the key,” he said, citing measures implemented in South Korea and Vietnam.
Travel restrictions and lockdowns implemented to arrest the virus’s spread will likely cut global trade by $1.7 trillion to $2.6 trillion, the ADB said.
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