Pandemic to slow Philippine economy 'substantially,' says ADB

Coronavirus could cost the global economy $4.1 trillion - Asian Development Bank warns

The cost of the coronavirus pandemic could be as high as $4.1 trillion, or nearly 5% of global gross domestic product, depending on the disease's spread through Europe, the USA and other major economies, the Asian Development Bank said.

The ADB said it expects the Chinese economy to expand 2.3 percent this year, down from the previous projection of 5.8 percent.

Excluding the newly industrialised economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia is forecast to grow 2.4% this year, compared to 5.7% in 2019, before rebounding to 6.7% next year.

Southeast Asia's growth this year is expected track the weakness in major trading partner China and slow to 1.0% from 4.4% last year, but regain momentum and finish next year with growth of 4.7%.

Inflation is likely to accelerate due to higher food costs, even as weaker economic activity and softer commodity prices mitigate any price spikes, before easing in 2021, the ADB said in the report.

Several other global organizations have anticipated slower growth for Vietnam this year due to the pandemic's impacts.

The ADB said the longer containment scenario assumes that outbound tourism from China drops by 55% for six months, travel bans continue to be imposed, inbound tourism is still affected, growth of domestic consumption falls by five percentage points and growth in local investments declines by 6.25%. Like most forecasts coming out during this period, the ADB noted that risks remained firmly on the downside owing to the Covid-19 outbreak.

Last year, GDP growth hit 7.02 percent, the second highest growth figure in the last decade, after a record 7.08 percent in 2018.

"Outcomes can be worse than forecast and growth may not recover as quickly", the bank said.

'No one can say how widely the COVID-19 pandemic may spread, and containment may take longer than now projected, ' ADB chief economist Yasuyuki Sawada said. It is poised for a recovery to 7.3% next year.

Noting that COVID-19 has not yet spread extensively in India, ADB said measures to contain the virus and a weaker global environment will whip up headwinds, offsetting support from corporate and personal income tax cuts as well as financial sector reforms which are meant to revive credit flows. "Were the virus to spread widely within India, economic activity would be severely constrained", the bank said.

"The government's emergency package and extensive use of Ehsaas will be vital to blunting the detrimental impacts of the pandemic, particularly on the poor and vulnerable", said the country director. He said the pandemic could turn into a financial crisis if not contained swiftly. The current account deficit is expected to settle at 0.3% of GDP, before widening to 1.4% next year.

On a macroscopic level, the South Asian region will face a milder economic slowdown, the bank predicted.

"Our research sees global losses from COVID-19 ranging from United States dollars 2 trillion to USD 4.1 trillion, equal to 2.3-4.8 per cent of global GDP", ADB said. "It became a supply shock as companies suffered shortages of labour ... and of materials as supply chains faltered", ADB said.

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