Bank estimates pandemic to cost $16.6 trillion tala
As much as ten per cent of the world’s Gross Domestic Product (G.D.P.) could be lost due to the global COVID-19 pandemic.
That's according to new research by the Asian Development Bank (A.D.B.).
The report suggests the global cost could be in the range of US$5.8 to $8.8 trillion (T$16.26 trillion), following previous research that suggested it would be between US$2 and $4.1 trillion. Losses in the Pacific region could range from $3.3 billion if containment measures last three months, to US$4.3 billion should they last for six months.
China alone is looking at losses of up to US$1.6 trillion, but the report found global successful policy responses to the pandemic may have saved some US$4.5 trillion in losses from happening.
Meanwhile trade is going to suffer significantly worse than first predicted. Majority of jobs lost will be from Asia and the Pacific, losses of between US$359 billion and $550 billion in labour income.
The A.D.B. has straightforward policy recommendations for the world:
“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,” the bank states.
“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 acknowledges that the Pacific Island countries and territories may have large economic variations between countries driven by their tourism and remittance driven shares of G.D.P., but that data was too scarce to report on it.
Trade in the Pacific will fall between $207 million and $250 million, epending on whether the world is locked down for three or six more months.
And jobs is set to fall by either 100,00 to 200,000 million or $193 million to $331 million, joining a further 242 million jobs lost to the pandemic globally.
The figure is seven times higher than jobs lost to the global financial crisis which led to the loss of 22 million jobs, according to the International Labour Organisation.
A.D.B. has predicted the region will spend 0.2 to 0.4 per cent of G.D.P. on health spending, with $226 million suggested as the upper end of spending.
The estimate is based on population infection rate of between two and six per cent case severity where 80 per cent of infected individuals experience mild symptoms, 18 per cent will require hospitalization, and 2 per cent will require critical care including the use of ventilators; and 12 per cent of the population being tested with confirmed cases isolated and their contacts traced.
Because of the low rate of infection, hospitalisation and testing across the region, the calculations require a caveat.
“For some economies with only few COVID-19 cases, such as the Pacific, the calculated impacts are modest, with a potential for substantial increases if COVID-19 caseloads intensify.
“A few important channels of COVID-19 effects on the economy have not been accounted for. These include: the impact on migration and remittances; the impact of death and disability on the labour force; the impact on capital flows, debt, and the financial markets; and the impact on the environment and climate change.”