Business

Asian Development Bank: Updated Assessment of the Potential Economic Impact of COVID-19

Published

2 years ago

May 19, 2020

This brief presents new projections on the economic impact of COVID-19 and highlights policy implications.

New analysis using the Global Trade Analysis Project model estimates that the global economic impact of COVID-19 could reach $5.8 trillion (6.4% of global GDP) under a 3-month containment scenario, and $8.8 trillion (9.7% of global GDP) under a 6-month containment scenario. It also updates estimates for Asia and the Pacific.

The brief highlights that policy interventions could reduce the impact of COVID-19 by 30% under the short containment scenario and by 40% under the long containment scenario.

Key Points:

New analysis using the Global Trade Analysis Project model estimates that the global economic impact of COVID-19 could reach
$5.8 trillion (6.4% of global GDP) under a 3-month containment scenario, and $8.8 trillion (9.7% of global GDP) under a 6-month containment scenario. This updates estimates published in the Asian Development Outlook 2020 on 3 April, which predicted global
COVID-19 losses of between $2.0 trillion and $4.1 trillion.

• The potential economic impact on Asia and the Pacific is estimated at $1.7 trillion (6.2% of regional GDP) under a 3-month containment scenario and $2.5 trillion (9.3% of regional GDP) under a 6-month containment scenario, with the region accounting for 30% of the overall decline in global output.

• Government policy responses —such as direct income and revenue support—could soften the COVID-19 impact by as much as 30%–40%, reducing the global economic loss to $4.1 trillion–$5.4 trillion (4.5%–5.9% of global GDP).

• Policy makers should work together to quickly limit the pandemic—the longer the containment period, the more difficult and prolonged the recovery will be. Strong income and employment protection are critical to support the most
vulnerable and avoid longterm economic scarring

Source: Asian Development Bank