The global economy could suffer between $5.8 trillion and $8.8 trillion in losses -- equivalent to 6.4 per cent to 9.7 per cent of the global GDP -- due to the COVID-19 pandemic, the Asian Development Bank (ADB) said in a report on Friday.
The report, Updated Assessment of the Potential Economic Impact of COVID-19, found that economic losses in Asia and the Pacific could range from $1.7 trillion under a short containment scenario of 3 months to $2.5 trillion under a long containment scenario of six months, with the region accounting for about 30 per cent of the overall decline in global output, reports Xinhua news agency.
The new analysis updates findings presented in the Asian Development Outlook (ADO) 2020 published in April, which estimated COVID-19's global cost to range from $2 trillion to $4.1 trillion.
Governments around the world have been quick in responding to the impacts of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending, and direct support to cover losses in incomes and revenues, the report released on Friday said.
Sustained efforts from governments focused on these measures could soften COVID-19's economic impact by as much as 30 percent to 40 per cent, it said, adding this could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
The analysis, which uses a Global Trade Analysis Project-computable general equilibrium model, covers 96 affected economies with over 4 million COVID-19 cases.
In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report included transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of COVID-19's global economic impact.
"This new analysis presents a broad picture of the very significant potential economic impact of COVID-19," ADB Chief Economist Yasuyuki Sawada said in a statement.
"It also highlights the important role policy interventions can play to help mitigate damage to economies. These findings can provide governments with a relevant policy guide as they develop and implement measures to contain and suppress the pandemic, and lessen its impacts on their economies and people," he added.
Under the short and long containment scenarios, the report noted that border closures, travel restrictions, and lockdowns that outbreak-affected economies implemented to stem the spread of COVID-19, will likely cut global trade by $1.7 trillion to $2.6 trillion.
The report projected global employment to decline between 158 million and 242 million jobs, with Asia and the Pacific comprising 70 per cent of total employment losses.