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15 May, 2020 07:52

Covid-19 crisis could leave $8.8 trillion hole in global economy, Asian Development Bank warns

Covid-19 crisis could leave $8.8 trillion hole in global economy, Asian Development Bank warns

The coronavirus pandemic could chop nearly 10 percent off global gross domestic product (GDP), the Asian Development Bank (ADB) predicts, more than doubling its previous forecast.

The global economy could suffer between $5.8 trillion and $8.8 trillion in losses, the equivalent of between 6.4 percent and 9.7 percent of global GDP, the report published on Friday said. This is much worse than the Manila-based bank predicted in April, when it said that the Covid-19 global cost could range between $2 trillion and $4.1 trillion.

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The blow to the global economy will depend on how long it will take to contain the pandemic, with the bank’s worst-case scenario implying that the measures will stay in place for a half a year. The damage will be less severe if curbs on movement and business last no longer than three months.

“This new analysis presents a broad picture of the very significant potential economic impact of Covid-19,” ADB Chief Economist Yasuyuki Sawada said. “It also highlights the important role policy interventions can play to help mitigate damage to economies.”

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The bank said that measures to contain the spread of the infection could inflict $1.7 trillion to $2.5 trillion in economic losses in Asia, while China alone may lose up to $1.6 trillion.

Earlier this week, the United Nations Department of Economic and Social Affairs forecast that the world economy is set to shrink by 3.2 percent this year, and the losses in output could reach $8.5 trillion in 2020 and 2021. The decline is set to nearly “wipe out” the cumulative output gains of the previous four years, according to the report.

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