The cost of the coronavirus pandemic could be as high as $4.1 trillion, or almost 5 per cent of global gross domestic product, depending on the disease’s spread through Europe, the United States and other major economies, the Asian Development Bank said on Friday.
“No one can say how widely the Covid-19 pandemic may spread, and containment may take longer than currently projected,” Yasuyuki Sawada, the ADB’s chief economist, said in the report. “The possibility of severe financial turmoil and financial crises cannot be discounted.”
On March 6, the ADB estimated the virus outbreak could cost the world economy $347 billion, and cut the global growth rate by as much as 0.4 percentage point. Since then, the epicentre of the virus has shifted from China to Europe and the US, with the number of global infections now topping 1 million.
The ADB cut its 2020 growth forecast for Asia to 2.2 per cent from 5.5 per cent estimated in September last year. China’s forecast was slashed to 2.3 per cent from 6 per cent and compares with 6.1 per cent growth last year. All of developing Asia’s subregions will see weaker growth this year, according to the report.
Inflation is likely to accelerate on higher food costs, even as weaker economic activity and softer commodity prices mitigate any price spikes, before easing in 2021, the ADB said.