The Asian Development Bank (ADB) doubled its estimate of the impact of the coronavirus pandemic on global economy, saying it expected economic losses of between i $5.8 trillion to $8.8 trillion, or 6.4% to 9.7% of global gross domestic product (GDP).
Economies with domestic outbreaks and strict lockdowns will be hardest hit as domestic demand weakens sharply. More open economies, and those that are tourism- or commodity-dependent, will also suffer from the collapse in global demand, ADB’s Chief Economist Yasuyuki Sawada said in a statement.
Containing the pandemic is key to reducing the economic cost, the bank said, adding that sufficient testing, tracing, and isolation; effective social distancing; and securing protective and medical equipment are all essential elements. It is also important for the government to support struggling families and businesses to mitigate adverse impacts of the pandemic and to avoid long-term consequences for growth and development.
ADB said its analysis finds that government policy responses will soften COVID-19’s global impact by 30% to 40%, reducing losses to $4.1 trillion to $5.4 trillion, or 4.5% to 5.9% of global GDP.
Rapid and effective containment will allow for a faster recovery. For this, adequate testing, tracing, and isolation are key. Then, it is critical to identify industries and occupations in terms of essentiality and economic importance, and their ability to operate safely with adequate social distancing, the bank said.
Finally, governments should re-open the economy sequentially, balancing health risks and economic considerations, and being ready to tighten if outbreaks reoccur. For all of this, having adequate data and information is key, it added.