ISLAMABAD                   -           The ongoing novel coronavirus (COVID-19) outbreak will have a significant impact on developing Asian economies through numerous channels, including sharp declines in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions, and health effects.

According to a new analysis by the Asian Development Bank (ADB), the magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain. The range of scenarios explored in the analysis suggests a global impact in the range of $77 billion to $347 billion, or 0.1% to 0.4% of global gross domestic product (GDP).

In a moderate scenario, where precautionary behaviors and restrictions such as travel bans start easing 3 months after the outbreak intensified and restrictions were imposed in late January, global losses could reach $156 billion, or 0.2% of global GDP. The People’s Republic of China (PRC) would account for $103 billion of those losses—or 0.8% of its GDP. The rest of developing Asia would lose $22 billion, or 0.2% of its GDP.

The COVID-19 would not hit Pakistan’s economy at large. Pakistan’s GDP may reduce by 0.01 percent due to it. There are several channels through which the COVID-19 outbreak will affect economic activity in the PRC, the rest of developing Asia, and the world. These include a sharp but temporary decline in domestic consumption in the PRC and other outbreak-affected economies, and possibly investment if the outbreak affects views on future business activity; declines in tourism and business travel; spillovers of weaker demand to other sectors and economies through trade and production linkages; supply-side disruptions to production and trade (which are distinct from demand-side shocks spilling over through trade and production linkages); and effects on health such as increased disease and mortality as well as shifts in health care spending. It would hurt the GDP growth of other economies like Maldives by 2.05 percent, Cambodia by 1.59 percent, Thailand 1.11 percent, Hong Kong China by 0.85 percent and people republic of China by 0.76 percent. ADB developing members that will be significantly affected are those with strong trade and production linkages with the PRC. In addition to tourism-dependent economies, other developing Asian economies such as Hong Kong, China; Mongolia; the Philippines; Singapore; Taipei,China; and Viet Nam will be materially affected by the COVID-19 outbreak. Many of these economies see a significant share of tourists from the PRC and are affected through that channel as well. “There are many uncertainties about COVID-19, including its economic impact,” said ADB Chief Economist Yasuyuki Sawada. “This requires the use of multiple scenarios to provide a clearer picture of potential losses. We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak.”

ADB’s response to COVID-19 to date includes $2 million announced on 7 February to enhance detection, prevention, and response in the PRC and the Greater Mekong Subregion; another $2 million announced on 26 February to support response in all its developing members; and a CNY130 million ($18.6 million) private sector loan, signed on 25 February, to Wuhan, PRC-based pharmaceutical distributor Jointown Pharmaceutical Group Co. Ltd. to support the continued supply of essential medicines and personal protective equipment. ADB stands ready to provide further support to its developing members in their efforts to respond to the adverse impact of COVID-19. ADB will use appropriate means to address the identified needs including through existing and new financial assistance, emergency assistance lending, policy-based lending, private sector investment, and knowledge and technical assistance.