The global economy could suffer between US$5.8 trillion and $8.8 trillion in losses, equivalent to 6.4% to 9.7% of global gross domestic product (GDP), as a result of the COVID-19 pandemic, according to a new report released by the Asian Development Bank (ADB).
The report finds that economic losses in Asia 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 six months, with the region accounting for about 30% of the overall decline in global output. China could suffer losses between $1.1 trillion and $1.6 trillion.
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% to 40%. This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
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, with Asia and the Pacific comprising 70% of total employment losses. Labor income around the world will decline by $1.2 trillion to $1.8 trillion—30% 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 says.