The cost of the COVID-19 pandemic could reach as much as US$8.8 trillion, or almost 10 percent of GDP, depending on how long the outbreak continues and the strength of government responses, the Asian Development Bank (ADB) said.
A shorter containment period of three months coupled with strong policy measures could limit the impact to US$4.1 trillion, or 4.5 percent of world output, the Manila-based lender said in a report yesterday.
The Asia-Pacific region is expected to account for about 30 percent 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 US$2 trillion to US$4.1 trillion the development bank gave on April 3.
There are now more than 4.4 million confirmed cases of COVID-19 globally, with deaths exceeding 302,000.
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 percent, the ADB said.
Between 158 million and 242 million jobs could be lost globally, with 70 percent of those in Asia and the Pacific, it said.
The region accounts for a bigger share of job losses as its manufacturing sector remains labor intensive, ADB senior economist James Villafuerte said in an interview yesterday 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 would be hit hardest, skilled workers in other sectors could also see temporary job displacement, Villafuerte said.
As consumption and investment decline, wages would drop globally, particularly in the US and Europe, chief economist Sawada said separately in an online briefing yesterday.
“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 are likely to cut global trade by US$1.7 trillion to US$2.6 trillion, the ADB said.
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