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Only the elephants remain... Tourism dependent Thailand will come worse off from the COVID-19 crisis. Asian economies will flounder, while China's growth will slip from 6% levels to just over 2% Image Credit: Gulf News Archive

Manila: 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 US and other major economies, the Asian Development Bank said.

A shorter containment period could limit the damage to $2 trillion, or 2.3 per cent of world output, the lender said in its outlook report. Developing Asia, including China, accounts for as much as 36 per cent of the pandemic’s total cost, it said.

“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. “The possibility of severe financial turmoil and financial crises cannot be discounted.”

36%

Asia's share of the total cost on the global economy ravaged by the coronavirus.

The cost keeps mounting

On March 6, the ADB had said the virus outbreak could cost the world economy $347 billion, and cut global growth rate by as much as 0.4 percentage point. Since then, the epicenter of the virus has shifted from China to Europe and the US, with the number of global infections now topping 1 million.

The new estimate takes into account the immediate impact on tourism, consumption and investment, Sawada said. The cost could rise further if supply-side disruptions materialize, he said.

In the report, 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.

Tourism- and commodity-dependent nations including Thailand “will suffer most” from the pandemic, Sawada said. If the disease can be contained within three to six months, the economic recovery could also be quicker, he said.

Inflation will likely 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 in the report.