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).
In a report titled ‘The Economic Impact of the COVID-19 Outbreak on Developing Asia’, ADB said among its member nations expected to be ‘significantly affected’ by the outbreak’s economic fallout included those ‘with strong trade and production linkages with China’.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),” ADB said in the report.
“Many of these economies see a significant share of tourists from China and are affected through that channel as well. China is also a major destination for these economies’ final as well as intermediate goods and services,” ADB said.
“Developing Asian economies such as Hong Kong, Mongolia, the Philippines, Singapore, Taiwan and Vietnam will be materially affected by the COVID-19 outbreak,” it said.
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 per cent of global GDP. China would account for $103 billion of those losses—or 0.8 per cent of its GDP. The rest of developing Asia would lose $22 billion, or 0.2 per cent of its GDP.
ADB’s response to COVID-19 to date includes $2 million announced on February 7 to enhance detection, prevention and response in the China and the Greater Mekong subregion; another $2 million announced on February 26 to support response in all its developing members; and a $18.6-million private sector loan, signed on February 25, to Wuhan-based pharmaceutical distributor Jointown Pharmaceutical Group to support the continued supply of essential medicines and personal protective equipment.
The Philippine economy could lose between $669 million and $1.94 billion as well as lose 87,000 to 252,000 jobs across five sectors due to the outbreak, it said. ADB calculations showed that the Philippines’ value chain had an exposure to China equivalent to 2 per cent of GDP in 2018.
Citing World Tourism Organisation data, ADB noted that 18 per cent of foreign tourists visiting the Philippines in 2018 were Chinese. Based on ADB estimates, in the best-case scenario where outbound tourism from China declines by half for two months, the Philippines would lose $801.4 million in tourism revenues or 0.242 per cent of GDP.
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