|COVID-19 impact on GDP of some ADB members (Source: ADB)
Under ADB’s report titled “The Economic Impact of the COVID-19 Outbreak on Developing Asia” released late last week, Vietnam’s damage was much better than that of other Asian economies, ranking ninth after Taipei (0.44%), Singapore (0.57%), Mongolia (0.74%), mainland China (0.76%), Hong Kong (0.85%), Thailand (1.11%), Cambodia (1.59%) and the Maldives (2.05%).
According to ADB, there are several channels through which the COVID-19 outbreak will affect economic activity in developing Asia and the world. These include a sharp but temporary decline in domestic consumption in China and other outbreak-affected economies, and possibly investment if the outbreak affects views on future business activity; declines in tourism and business travel; spillovers of weaker demand to other sectors and economies through trade and production linkages; supply-side disruptions to production and trade (which are distinct from demand-side shocks spilling over through trade and production linkages); and effects on health such as increased disease and mortality as well as shifts in healthcare spending. Each of these is taken in turn.
ADB says developing members that will be significantly affected are those with strong trade and production linkages with mainland China. In addition to tourism-dependent economies, other developing Asian economies such as Hong Kong (China), Mongolia, the Philippines, Singapore, Taipei (China) and Vietnam will be materially affected by the COVID-19 outbreak. Many of these economies see a significant share of tourists from mainland China and are affected through that channel as well.
“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 US$77 billion to US$347 billion, or 0.1% to 0.4% of global gross domestic product (GDP),” ADB said in the report.
In a moderate scenario, where precautionary behaviours and restrictions such as travel bans start easing three months after the outbreak intensified and restrictions were imposed in late January, global losses could reach US$156 billion, or 0.2% of global GDP. Mainland China would account for US$103 billion of those losses – or 0.8% of its GDP. The rest of developing Asia would lose US$22 billion, or 0.2% of its GDP.