The Asian Development Bank (ADB) has warned that the novel coronavirus disease (Covid-19) pandemic could cost $5.8 trillion to $8.8 trillion or 6.4% to 9.7% of global gross domestic product (GDP), should there be failure to formulate appropriate policy responses.
“This is more than double ADB’s estimate in April 2020,” said ADB chief economist Yasuyuki Sawada in a video uploaded this morning.
He said economies with domestic outbreaks and strict lockdowns would be hardest hit as domestic demand had weakened sharply. More open economies, and those that are “tourism- or commodity-dependent, will also suffer from the collapse in global demand.”
Sawada said containing the pandemic was key to reducing the economic cost, through sufficient testing, tracing, and isolation, effective social distancing, as well as securing protective and medical equipment.
He underscored the importance of government support for struggling families and businesses to cushion the adverse impacts of the pandemic and forestall long-term consequences for growth and development.
“ADB’s analysis finds that government policy responses will soften Covid-19’s global impact by 30-40%, reducing losses to US$4.1 to US$5.4 trillion, or by 4.5% to 5.9% of global GDP,” the ADB said.
Sawada said rapid and effective containment would allow for a faster recoveries and would require adequate testing, tracing and isolation of identified Covid-19 positive cases.
It was also critical to identify industries and occupations in terms of importance, as well as their ability to operate safely with appropriate social distancing.
The ADB said governments “should re-open the economy sequentially, balancing heath risks and economic considerations, and being ready to tighten if outbreaks reoccur.”
Governments however need adequate data and information to chart their respective programs, Sawada said. (Melo M. Acuña)