COVID-19 outbreak to cost Viet Nam 0.41% of GDP: ADB
COVID-19 outbreak to cost Viet Nam 0.41% of GDP: ADB
Viet Nam is forecast to lose some 0.41 per cent of GDP due to the novel coronavirus (COVID-19) outbreak, according to the latest report by the Asian Development Bank (ADB).
Under ADB’s report titled “The Economic Impact of the COVID-19 Outbreak on Developing Asia” released late last week, Viet Nam’s damage was much better than that of other Asian countries and economies, ranking ninth after Taipei (0.44 per cent), Singapore (0.57 per cent), Mongolia (0.74 per cent), mainland China (0.76 per cent), Hong Kong (0.85 per cent), Thailand (1.11 per cent), Cambodia (1.59 per cent) and the Maldives (2.05 per cent).
According to ADB, there are several channels through which the COVID-19 outbreak will affect economic activity in developing Asia and the world. These include a sharp but temporary decline in domestic consumption in China 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 healthcare spending. Each of these is taken in turn.
ADB says developing members that will be significantly affected are those with strong trade and production linkages with mainland China. 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 mainland China and are affected through that channel as well.
“The magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain. The range of scenarios explored in the analysis suggests a global impact in the range of US$77 billion to $347 billion, or 0.1 per cent to 0.4 per cent of global gross domestic product (GDP),” ADB said in the report.
In a moderate scenario, where precautionary behaviours and restrictions such as travel bans start easing three months after the outbreak intensified and restrictions were imposed in late January, global losses could reach $156 billion, or 0.2 per cent of global GDP. Mainland China would account for $103 billion of those losses – or 0.8 per cent of its GDP. The rest of developing Asia would lose $22 billion, or 0.2 per cent of its GDP.
“There are many uncertainties about COVID-19, including its economic impact,” said ADB Chief Economist Yasuyuki Sawada. “This requires the use of multiple scenarios to provide a clearer picture of potential losses. We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak.”
