On May 15, 2020, According to a report “Updated Assessment of the Potential Economic Impact of COVID-19” released by Asian Development Bank (ADB), global economy is expected to lose between $ 5.8 trillion to $ 8.8 trillion, which will be 6.4 % to 9.7 % of global gross domestic product (GDP), due to the outbreak of the novel Coronavirus (COVID-19).
i.Too much damage from previous estimates: Earlier on April 3, 2020, ADB in its Asian Development Outlook (ADO) 2020 had estimated a loss of $ 2 trillion to $ 4.1 trillion in the global economy due to the coronavirus. In March 6, 2020, ADB estimated losses of 77 billion to 347 billion dollars (0.1 -0.4 %of global GDP).
ii.Region wise estimates:
- As per ADB, the GDP in South Asia is expected to decrease from $ 142 billion (3.9%) -$ 218 billion (6 %) due to stringent lockdown restrictions imposed by nations like Bangladesh, India and Pakistan to prevent the coronavirus infection.
- If the Asia-Pacific region faces a brief 3-month containment ban, the GDP loss could be as high as $ 1.7 trillion. But if the restrictions are stretched for six months to prevent infection, the loss could be up to $ 2.5 trillion. The sector will account for about 30 % of the total loss in GDP around the world.
- In the People’s Republic of China (PRC), this loss can range from 1.1 trillion to 1.6 trillion dollars.
iii.Loss of Labour income: Worldwide, workers’ revenues will fall from $ 1.2 trillion to $ 1.8 trillion.While in Asia, wage revenues will fall from $ 359 billion to $ 550 billion.COVID-19 will likely cut global trade by $1.7 trillion to $2.6 trillion. Global employment decline will be between 158 million and 242 million jobs, with Asia and the Pacific comprising 70% of total employment losses.
iv.The latest ADB estimates are predicting double the global GDP loss than the previous estimates of the World Bank (WB) and IMF’s (International Monetary Fund) World Economic Outlook. The WB had predicted losses of 2-4 % and IMF estimated 6.3 %. ADB’s loss estimates do not include the measures being taken by all countries to handle the economy. This means that the decline may be limited due to efforts such as relief packages.
About Asian Development Bank (ADB):
Headquarters– Manila, Philippines
Membership– 68 countries
President– Masatsugu Asakawa
Chief Economist– Yasuyuki Sawada