The global economy will see a much bigger hit from the coronavirus pandemic than previously expected, the Asian Development Bank (ADB) has warned in its annual report.
According to the gloomiest scenario presented by the bank, the impact of the “worst pandemic in a century” will be as high as $4.1 trillion, or 4.8 percent of global gross domestic product (GDP). However, even this forecast could turn out worse given the impact of the outbreak on global supply chains and how long it will take to contain the virus.
“The estimated impact could be an underestimate, as additional channels such as supply disruptions, interrupted remittances, possible social and financial crises, and long-term effects on health care and education are excluded from the analysis,” reads the Asian Development Outlook (ADO) 2020, the ADB’s annual economic report.
While the higher forecast reflects the spread of the infection to Europe, the US, and other major economies, on the low end, the global cost could be $2 trillion if demand shocks are smaller and containment periods shorten, it says.
People wearing protective face masks in Shanghai, China March 10, 2020 © Reuters / Aly Song
Even the best-case scenario indicates a sharp rise in estimated economic fallout from the coronavirus crisis. An earlier report released by the lender on March 6 showed that the virus could cost the world around $347 billion in the worst-case scenario.
According to the latest outlook, regional economic growth in developing Asia will decline sharply this year amid the Covid-19 outbreak. The report forecasts regional growth of 2.2 percent in 2020, down more than three percent from earlier predictions. However, growth is expected to rebound to more than six percent in 2021, if the world returns to normal.