Global economy 'could shrink 5%'
April 3, 2020
The coronavirus pandemic could cost the global economy $4.1 trillion (€3.78 trillion) as it ravages the United States, Europe and other major economies, the Asian Development Bank (ADB) warned on Friday.
The Manila-based organization said the "possibility of severe financial turmoil and financial crises cannot be discounted."
In its latest report, the ADB said the figure amounted to nearly 5% of worldwide economic output, based on the health emergency lasting 6 months or more. It added that the losses could be worse still.
"The estimated impact could be an underestimate, as additional channels such as ... possible social and financial crises, and long-term effects on health care and education are excluded from the analysis," the ADB's chief economist Yasuyuki Sawada said.
He added that a shorter containment period to stem the spread of the virus could reduce the economic losses to $2 trillion.
Read more: Follow the latest developments with our rolling coverage
China growth sputters
The report said China, the world's second-biggest economy, saw double-digit contractions in business activity in January and February and will likely see growth fall to 2.3% this year from a three-decade low of 6.1% in 2019.
China is trying to get its economy back on track after unprecedented shutdowns in Wuhan, where the virus was first reported, and other parts of the country.
The ADB said China could suffer losses amounting to up to $692 billion if containment efforts drag on. But the bank estimated that growth would bounce back next year to more than 7%.
Asia as a whole is forecast to grow just 2.2% this year, its slowest pace since a 1.7% expansion during the 1998 Asian financial crisis.
Read more: Coronavirus: China and responsible action
Developing nations hit hard
The regional lender said growth in developing Asia would likely fall to 2.2% in 2020 from 5.2% last year, and account for up to 36% of the estimated losses.
Sawada said the bank's forecasts assume the coronavirus outbreak will be contained this year and return to normal in 2021.
But he warned that "supply chains could be permanently interrupted, and there could be a retreat in globalization and regional integration."
Read more: What do futurists imagine for the post-coronavirus-pandemic world?
This would be a blow to Asia which has benefited hugely from open economies and liberal trade and capital flows in the past decade, he added.
On Thursday, the number of global COVID-19 cases topped the one million mark with more than 52,500 deaths.
Governments around the world have pledged more than $5 trillion in stimulus, while also easing monetary policy, as their economies grind to a halt.
mm/rt (AFP, AP, dpa)