ADB: Coronavirus could Cut Global Growth by 0.1% to 0.4%

The Asian Development Bank (ADB) said on Friday the coronavirus outbreak is set to cut global and developing Asia’s economic growth this year.

The outbreak could slash global gross domestic product by 0.1 to 0.4% while economic growth in China and developing Asia, excluding China, could be reduced by 0.3 to 1.7% and 0.2 to 0.5%, respectively, the ADB said in an analysis that outlined best-and worst-case scenarios.

The ADB said the coronavirus outbreak could lead to sharp declines in domestic demand, tourism and business travel, trade and production linkages, supply disruptions, hurting growth in developing Asia.

"Economic activity will be affected in many ways. There are several channels through which the COVID-19 outbreak will affect economic activity in the PRC, the rest of developing Asia, and the world. These include a sharp but temporary decline in domestic consumption in the PRC 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 health care spending. Each of these are taken in turn.

"ADB developing members that will be significantly affected are those with strong trade and production linkages with the PRC. In addition to tourism-dependent economies, other developing Asian economies such as Hong Kong, China; Mongolia; the Philippines; Singapore; Taipei, China; and Viet Nam will be materially affected by the COVID-19 outbreak. Many of these economies see a significant share of tourists from the PRC and are affected through that channel as well," ADB said in an analysis published on its official website. 

Source: The Asian Development Bank

Photo source: Reuters