ADB talks impact of COVID-19 on economy of Central Asia

BAKU, Azerbaijan, May 15

By Ilkin Seyfaddini - Trend:

The global economy could suffer between $5.8 trillion and $8.8 trillion in losses - equivalent from to 6.4 percent to 9.7 percent of global gross domestic product (GDP) - as a result of the novel coronavirus disease (COVID-19) pandemic, Trend reports with reference to new report of the Asian Development Bank (ADB).

"Economic losses in Asia and the Pacific could range from $1.7 trillion under a short containment scenario of three months to $2.5 trillion under a long containment scenario of 6 months, with the region accounting for about 30 percent of the overall decline in global output. The new analysis updates findings presented in the Asian Development Outlook (ADO) 2020 published on 3 April, which estimated COVID-19’s global cost to range from $2 trillion to $4.1 trillion," the report said.

According to ADB, governments around the world have been quick in responding to the impacts of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending, and direct support to cover losses in incomes and revenues. Sustained efforts from governments focused on these measures could soften COVID‑19’s economic impact by as much as 30 percent to 40 percent, according to the report. This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.

"The analysis, which uses a Global Trade Analysis Project-computable general equilibrium model, covers 96 outbreak-affected economies with over 4 million COVID-19 cases. In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report includes transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of COVID-19’s global economic impact," the report said.

Under the short and long containment scenarios, the report notes that border closures, travel restrictions, and lockdowns that outbreak-affected economies implemented to arrest the spread of 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. Labor income around the world will decline by $1.2 trillion to $1.8 trillion, 30 percent of which will be felt by economies in the region, or between $359 billion and $550 billion.

Apart from increasing health spending and strengthening health systems, strong income and employment protection are essential to avoid a more difficult and prolonged economic recovery. Governments should manage supply chain disruptions; support and deepen e-commerce and logistics for the delivery of goods and services; and fund temporary social protection measures, unemployment subsidies, and the distribution of essential commodities, particularly food, to prevent sharper falls in consumption, the report said.

ADB is actively supporting its members to address the effects of COVID-19 through its $20 billion response package announced on 13 April.

The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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