1、The Economic Impact of the COVID-19 Outbreak on Developing Asia The Economic Impact of the COVID-19 Outbreak on Developing Asia1 WhAT Is COVID-19? A new coronavirus disease, now known as COVID-19, was first identified in Wuhan, Peoples Republic of China (PRC), in early January 2020. From the informa

2、tion known at this point, several facts are pertinent. First, it belongs to the same family of coronaviruses that caused the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 and the Middle East Respiratory Syndrome (MERS) outbreak in 2012. Second, the mortality rate (number of deaths relati

3、ve to number of cases), which is as yet imprecisely estimated, is probably in the range of 1%3.4%significantly lower than 10% for SARS and 34% for MERS (Table 1, first column), but substantially higher than the mortality rate for seasonal flu, which is less than 0.1%.2 Third, even though it emerged

4、from animal hosts, it now spreads through human-to-human contact. The infection rate of COVID-19 appears to be higher than that for the seasonal flu and MERS, with the range of possible estimates encompassing the infection rates of SARS and Ebola (Table 1, second column). 1 The authors of this brief

5、 are Abdul Abiad, Mia Arao, Suzette Dagli, Benno Ferrarini, Ilan Noy, Patrick Osewe, Jesson Pagaduan, Donghyun Park, and Reizle Platitas. The work has benefited from comments received from numerous colleagues across the Asian Development Bank (ADB). 2 An analysis published in JAMA ( of 72,314 cases

6、in the PRC found an overall case fatality rate of 2.3%, with much higher fatality rates for those aged 7079 (8.0%) and those aged 80 and above (14.8%). ADB BRIEFS NO. 128 6 March 2020 ISBN 978-92-9262-063-9 (print) ISBN 978-92-9262-064-6 (electronic) ISSN 2071-7202 (print) ISSN 2218-2675 (electronic

7、) Publication Stock No. BRF200096 DOI: http:/dx.doi.org/10.22617/BRF200096 KEy MEssAgEs The ongoing COVID-19 outbreak affects the PRC and other developing Asian economies through numerous channels, including sharp declines in domestic demand, lower tourism and business travel, trade and production l

8、inkages, supply disruptions, andhealth effects. The magnitude of theeconomic impact will depend on how the outbreak evolves, which remains highly uncertain. Rather than focusing on a single estimate, itis important to explore a range of scenarios, assess the impact conditional on these scenarios mat

9、erializing, and to update the scenarios as needed. The range of scenarios explored in this brief suggest a global impact of $77 billion to $347billion or 0.1% to 0.4% of global GDP, with a moderate case estimate of $156 billion or 0.2% of global GDP. Two-thirds of the impact falls on the PRC, where

10、the outbreak has been concentrated so far. The estimated impact on individual developing Asian economiesand on sectors within these economiesis provided in this brief, including a hypothetical worst-case scenario for a given economy that experiences a significant outbreak of its own. Table 1. Fatali

11、ty rates and Infection rates of cOVID-19 and Other Epidemics Fatality rate (deaths/cases)Infection rate (per infected person) Ebola50%1.52.5 MERS34.30%0.420.92 SARS10%3 COVID-191%3.4%1.53.5 Seasonal flu0.05%1.3 MERS = Middle East Respiratory Syndrome, SARS = Severe Acute Respiratory Syndrome. Source

12、s: World Health Organization; Centers for Disease Control and Prevention; Althus, C. 2014. Estimating the Reproduction Number of Ebola Virus (EBOV) During the 2014 Outbreak in West Africa. https:/doi.org/10.1371/currents.outbreaks.91afb5e0f279e7f29e7056095255b288; Choi, S., E. Jung, B.Y. Choi, Y.J.

13、Hur, and M. Ki. 2018. High Reproduction Number of Middle East Respiratory Syndrome Coronavirus in Nosocomial Outbreaks: Mathematical Modelling in Saudi Arabia and South Korea. Journal of Hospital Infection. 99. pp.162168; Heymann, D. L. and N. Shindo. 2020. COVID-19: What is Next for Public Health?.

14、 Lancet. https:/doi.org/10.1016/S0140-6736(20)30374-3; and Wu, Z. and J. McGoogan. 2020. Characteristics of and Important Lessons from the Coronavirus Disease 2019 (COVID-19) Outbreak in China: Summary of a Report of 72,314 Cases from the Chinese Center for Disease Control and Prevention. JAMA. http

15、s:/10.1001/jama.2020.2648. ADB BRIEFS NO. 128 2 The number of confirmed COVID-19 cases has risen rapidly, first in the PRC and more recently worldwide, quickly surpassing the totals from sARs. As of end-February 2020, COVID-19 had infected 85,403 people in 55 economies, with a global death toll of 2

16、,924. The PRC still accounts for the vast majority97% of total fatalities and 93% of total cases (Figure 1). As of early March, however, the number of confirmed cases outside the PRC has been rising, particularly in the Republic of Korea (3,150), Italy (888), and Iran (388). Despite having a similar

17、 infection rate yet lower fatality rate than SARS, total cases and fatalities from COVID-19 have already far surpassed the totals for the 2003 SARS outbreak (Figure 2). This brief summarizes ADB analysis of the global, regional, and economy- and sector-specific economic impact of the COVID-19 outbre

18、ak. It lays out the various channels through which economies will be affected and quantifies the likely magnitudes of the effects under a range of scenarios. It is explicit about the scenario assumptions, and the methods used to calculate the impact. Importantly, the brief provides estimates not onl

19、y of the global and regional impacts, but also granular details on how individual economiesand sectors within economieswill be affected, including under an illustrative worst-case scenario for an economy that experiences a significant outbreak. The brief concludes by summarizing the actions ADB and

20、its developing member countries (DMCs) are taking to respond to the COVID-19 outbreak. 0 20,000 40,000 60,000 80,000 100,000 20/01/2020 30/01/2020 09/02/2020 19/02/2020 29/02/2020 Peoples Republic of ChinaRest of the World Figure 1. Total cOVID-19 cases, 20 Jan29 Feb 2020 Note: The discrete jump in

21、the series in mid-February is due to the change in the diagnostic criterion applied to identify infections. Sources: CEIC Data Company; and World Health Organization. 2020. Coronavirus disease (COVID-19) situation reports. https:/www.who.int/emergencies/ diseases/novel-coronavirus-2019/situation-rep

22、orts/ (accessed 2 March 2020). 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 t

23、he 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 produ

24、ction 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. Eachof these are taken in turn. Consumption in the PRC will experience a sharp, t

25、emporary drop, as occurred during the 2003 sARs outbreak. Perhapsthe most important channel through which economic activity is affected is through a sharp but temporary decline in domestic consumption in the PRC resulting from behavioral and/or policy changespeople staying home as a precaution, or b

26、ecause they are told to. This occurred during the SARS outbreak in 2003; retailsales growth in the PRC declined by almost 3 percentage points (pp) during the second quarter of 2003 (Figure 3). Thesize of the consumption shock in the current outbreak could be The Economic Impact of the COVID-19 Outbr

27、eak on Developing Asia 3 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 1 3 5 7 9 11 131517 934345474956365676971 7375 SARS deaths COVID-19 infections COVID-19 deaths 26 Apr 2003 29 Feb 2020 17 Mar 2003 20 Jan 2020 SARS infections 7 Aug 2003 3 The p

28、recise assumptions about the size and duration of the consumption and/or investment declines under various scenarios are spelled out in the next section, particularly in Table 2. Figure 2. SarS and cOVID-19 Infections and Fatalities SARS = Severe Acute Respiratory Syndrome. Source: Asian Development

29、 Bank calculations using data from CEIC Data Company and World Health Organization. 2020. Coronavirus disease (COVID-19) situation reports. https:/www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports/ (accessed 2 March 2020). Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-

30、02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 12 11 10 9 8 7 6 5 4 SARS Outbreak (FebJune 2003) PRC: Retail sales, 20022003 (y/y % change) Figure 3. retail Sales and Personal consumption Expenditures during SarS Episode SARS = Seve

31、re Acute Respiratory Syndrome. Sources: Haver Analytics; CEIC Data Company; WHO; and ADB. bigger than that experienced in 2003, depending on the length and severity of the outbreak and the policy responses taken. Ina scenario where the outbreak is more protracted, expands its geographic reach, and/o

32、r becomes a recurring phenomenon that affects future business activity materially, a decline in investment isalso possible.3 ADB BRIEFS NO. 128 4 Another important channel though which economies will be affected is tourism and business travel, in the PRC and other economies. Tourism is an important

33、source of revenue for many economies in developing Asiainternational tourism receipts account for more than 40% of the gross domestic product (GDP) in economies like Palau and Maldives, for example (Figure 4), and total travel and tourism (including domestic tourism) exceeds 10% of GDP in almost hal

34、f of ADBs members.4 Importantly, Chinese visitors now comprise a significant share of tourists in many of these economies, as the number of outbound tourists from the PRC has increased eight-fold from less than 11 million in 2003 to close to 87 million by 2018. In 2018, tourists from the PRC account

35、ed for more than a quarter of total tourist arrivals in Myanmar; Thailand; Mongolia; the Republic of Korea; Viet Nam; Cambodia; Palau; and Hong Kong, China (Figure 5). Tourism arrivals and receipts in many developing Asian economies are expected to decline sharply, as a result of numerous travel ban

36、s as well as precautionary behavior. One of the most significant travel bans is the one imposed by the PRC itself. On 24 January 2020, the Government of the PRC imposed a travel ban on all outbound tourism by tour groups.5 This ban, which remains in effect, affects 55% of the PRCs total outbound tou

37、rism.6 In addition, at least 47 economies have imposed bans on travel to and from the PRC, including Australia, the United States, and the Russian Federation.7 Many airlines have suspended or sharply curtailed flights to the PRC as well. It is likely that the PRC will see a decline in tourist arriva

38、ls by at least as large as the 7.7% year-on-year decline it experienced in 2003 during the SARS outbreak (Figure 6). As for the rest of developing Asia, even without explicit bans on travel to other Asian economies, non-Chinese tourist arrivals are likely to decline as tourists avoid traveling in th

39、e region. During the 2003 SARS outbreak, for example, Southeast and East Asian economies such as Indonesia, Thailand, and the Republic of Korea all saw declines in arrivals from economies outside Asia in 2003, even though they had very few SARS cases (Figure 7).8 These demand shocks can spill over t

40、o other sectors and economies via trade and production linkages. The PRC is now the worlds second-largest economy, and accounts for one- third of global growth. It is a major export market for many ADB DMCs, with exports to the PRC being a substantial fraction of GDP (Figure 8). Thus, a drop in dema

41、nd for goods and services from the PRC is likely to be felt widely. ADBs 2018 Multiregional Input-Output Table (MRIOT) was used to incorporate spillovers of demand shocks via trade and production linkages. It measures all inter-sector and inter-economy linkages for 62economies (accounting for 95% of

42、 global GDP), with each economy disaggregated into 35 sectors covering both goods and services. Shocks to final demandin this case, tourism demand and domestic consumptionare transmitted across sectors and borders via trade and production linkages, and one can trace their knock-on effects via the MR

43、IOT.9 There are other important channels, including supply-side disruptions and economic effects through health and health care. There have been substantial production disruptions as a result of forced business closures and the inability of workers to get to work, as well as disruptions to trade and

44、 business as a result of border closures, travel bans, and other restrictions on the movement of goods, people, and capital. High-frequency indicators suggest that production in the PRC as a whole fell to 50%60% of normal levels but is now normalizing. The PRC is a global and regional hub for manufa

45、cturing and value chains many economies export a significant amount of intermediate goods to the PRC, and other economies use inputs from the PRC in their production (Figure 9). As a result, these temporary disruptions can affect production and trade in other economies, although the overall impact m

46、ay be mitigated by the fact that in some sectors (particularly in manufacturing) production can be ramped up in later periods to make up for lower production in the past. Lastly, there may also be important long-term economic effects through COVID-19s health impacts on mortality and morbidity, and t

47、hrough changes in (and diversion of) health care 4 World Travel and Tourism Council. 2019. Top 20 Countries - Largest Contribution of Travel and Tourism GDP. https:/www.wttc.org/economic-impact/country- analysis/league-table-summaries/ (accessed 6 February 2020). 5 China Daily. 2020. Group tours, tr

48、avel packages suspended across China. China Daily, 25 Jan. WS5e2c486ea33a9.html (accessed 6 February 2020). 6 World Tourism Organization. 2019. Guidelines for the Success in the Chinese Outbound Tourism Market. Madrid: UNWTO. https:/doi. org/10.18111/9789284421138. 7 SCMP Graphics. 2020.

49、Coronavirus: Places and Airlines Restricting China transit. 18 Feb. article/3051149/coronavirus-travel-restrictions-on-china/index.html (accessed 3 Mar 2020). 8 To calculate the impact of travel bans and precautionary behavior on tourism receipts, the authors used 2018 bilateral tourism arrivals data from the World Tourism Organization. The authors assume travel bans and precautionary travel behavior will last for two months in the best-case scenario; three months in the moderate scenario; and six months in the worse-case scenario (see the discussion that fo