The coronavirus pandemic could cost the global economy up to $8.8tn £7.1tn), according to a report by the Asian Development Bank (ADB).
As countries around the world begin reopening their borders and easing lockdown restrictions, the global economic activity has suffered considerably despite government actions to cushion their economies from the outbreak’s impact.
The bank’s projections range between $5.8tn and $8.8tn and are almost more than double last month’s and equate to 6.4%-9.7% of the world’s economic output.
“This new analysis presents a broad picture of the very significant potential economic impact of Covid-19,” the ADB’s chief economist Yasuyuki Sawada said.
“It also highlights the important role policy interventions can play to help mitigate damage to economies,” he added.
US recovery may take longer, warns Fed
The ADB said on Friday the top end of the range was based on the assumption that curbs to movement and businesses operating would last six months, while the bottom end assumed the restrictions would end in three months.
Various central banks around the world have cut interest rates and introduced out massive stimulus measures to help combat the impact of the outbreak to offset the adverse effect the pandemic has had on financial markets and entire sectors.
New figures published on 17 May showed the huge impact of the health crisis on the world’s biggest economy as the number of Americans seeking unemployment benefits jumped by almost 3 million last week. Nearly a quarter of the US workforce is now claiming some form of benefits.
Earlier this week the chairman of the US Federal Reserve warned that America’s economic recovery is likely to be slower than initially hoped. Fed chairman Jerome Powell stressed that the US faces a slow and painful economic recovery without additional government relief.
At the same time, it was estimated that the UK government’s efforts to combat the coronavirus pandemic has risen to £123.2bn.
Meanwhile, the United Nations Department of Economic and Social Affairs forecasts that the world economy is set to shrink by 3.2 per cent this year with losses in output of up to $8.5trn in 2020 and 2021. Brussels has had to abandon any hope of growth for both the EU and the euro area in 2020. as the economies are set to contract by 7.5 and 7.75 per cent respectively, according to this year’s Spring Economic Forecast released on Wednesday. The decline is set to be the worst ever for the eurozone and will nearly “wipe out” the cumulative output gains of the previous four years, according to the report.