The Asian Development Bank (ADB) has predicted that the unprecedented outbreak of deadly coronavirus can cost the global economy at least $5.8 trillion and the losses can go up to $8.8 trillion. This prediction is nearly double the prediction of World Bank made last month that equated to 6.4 per cent to 9.7 per cent of the world’s economic output. The precautionary measures including the nationwide lockdowns to curb the further spread of COVID-19 pandemic have severely impacted the global economy and businesses across the world.
The ADB's chief economist Yasuyuki Sawada has reportedly said that the new analysis showcases the “broad picture” of the significant impact that COVID-19 pandemic can potentially have on the economy. The prediction even underlines the role of “policy interventions” that would mitigate the monetary damage of the global health crisis. According to the ADB, the top-end range is based on the assumption that the restriction imposed on the countries would last for at least six months while the lower range will be met if movement and businesses are allowed to operate within three months.
ADB said, "This brief updates the ADB estimates for the economic impact of COVID-19 using the GTAP CGE model. Based on this analysis, the impact of COVID-19 is now estimated at $5.8 trillion to $8.8 trillion (6.4% to 9.7% of global GDP), excluding the impact of policy measures."
"ADB’s new estimate is more than double the World Bank’s 16 April 2020 estimate of a 2%–4% decline in global GDP, and higher than the IMF’s April 2020 World Economic Outlook estimate of 6.3% decline in global GDP," it added.
ADB estimates that #COVID19 losses may reach $8.8 trillion, or 9.7% of global GDP. But timely policy responses may soften the impact by 30% to 40%, reducing losses to $5.4 trillion, or 5.9% of global GDP.— Asian Development Bank (@ADB_HQ) May 16, 2020
Read the @adbpublications report: https://t.co/0IGngjkQ5c pic.twitter.com/qlyeQFFRAm
Meanwhile, in a bid to battle the plunging economy, House Democrats passed a $3 trillion relief package with a narrow margin on May 15 but it might face some scrutiny in the Senate as Republicans expressed discontent with the largest-ever economic rescue package in the US. ‘The Heroes Act’ was largely passed along the party lines and if it makes it through the upper house, it would provide at least $1 trillion for both state and local government along with distribution of cash among millions of families in America who have been hard-hit by the coronavirus outbreak.
The official statement read, “At a time when America needs to take urgent action to confront this dire situation, The Heroes Act provides strong support for our heroes with nearly $1 trillion for state, local, territorial and tribal governments who desperately need funds to pay the health care workers, police, fire, transportation, EMS, teachers and other vital workers who keep us safe and are in danger of losing their jobs.”