ISLAMABAD: The global economy could suffer losses in the range of $5.8 trillion to $8.8 trillion - equivalent to 6.4% to 9.7% of global gross domestic product (GDP) - as a result of the novel coronavirus (Covid-19) pandemic, says a new report released by the Asian Development Bank (ADB) on Friday.
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 three months to $2.5 trillion under a long containment scenario of six months, with the region accounting for about 30% of the overall decline in global output.
China could suffer losses of between $1.1 trillion and $1.6 trillion. The new analysis updates the findings presented in the Asian Development Outlook (ADO) 2020 published on April 3, which estimated Covid-19's global cost in the range of $2 trillion to $4.1 trillion.
Governments around the world have been quick in responding to the impact of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending and direct support to cover losses in incomes and revenues.
Sustained efforts from governments focused on these measures could soften Covid-19's economic impact by 30% to 40%, according to the report. This could reduce global economic losses due to the pandemic by $4.1 trillion to $5.4 trillion.
The analysis, which uses the Global Trade Analysis Project - a computable general equilibrium model, covers 96 outbreak-affected economies with over four million Covid-19 cases.
In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report includes transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of Covid-19's global economic impact.
"This new analysis presents a broad picture of the very significant potential economic impact of Covid-19," said ADB Chief Economist Yasuyuki Sawada.
"It also highlights the important role policy interventions can play to help mitigate damage to economies. These findings can provide governments with a relevant policy guide as they develop and implement measures to contain and suppress the pandemic, and lessen its impact on their economies and people."
Published in The Express Tribune, May 16th, 2020.
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