The Covid-19 outbreak has badly hit the developing Asian countries such as Bangladesh. The ongoing virus outbreak through numerous channels will have serious impacts on developing Asian economies and some effects are already visible. These include sharp decline in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions, and health effects.
The magnitude of the economic losses will depend on how the outbreak evolves. This remains highly uncertain as to how it will evolve, says a new Asian Development Bank (ADB) analysis on 'The Economic Impact of the Covid-19 Outbreak on Developing Asia'. It has projected a global impact in the range of US$77-US$347 billion. The loss in other words due to this virus is 0.1-0.4 per cent of global gross domestic product (GDP). In a moderate scenario, global losses could reach US$156 billion, or 0.2 per cent of global GDP, where precautionary behaviours and restrictions such as travel bans start easing five months after the outbreak intensified and restrictions were imposed in late January 2020. China would account for US$103 billion of those losses or 0.8 per cent of its GDP. The rest of developing Asia would lose US$22 billion, or 0.2 per cent of its GDP, according to the analysis.
To mitigate human and economic impacts of this outbreak it is hoped that this analysis can support governments as they prepare clear and decisive responses. It presents estimated impact on individual developing Asian economies and on sectors within these economies.
In the meantime, the World Health Organisation (WHO) voiced deep concern about a rapid escalation and global spread of Covid-19 cases from the coronavirus, which has now swept over 210 countries and territories. WHO Director-General Tedros Adhanom Ghebreyesus said that the World Bank and the International Monetary Fund (IMF) together backed debt relief to help developing countries to cope with the pandemic's social and economic consequences.
Many developing countries including Bangladesh will struggle to implement social welfare programmes due to economic fallouts of the coronavirus crisis. Debt relief for those countries is essential to enable them to take care of their people and avoid economic collapse. This is a call from the WHO on the World Bank and IMF for debt relief for developing countries. But debt relief processes are lengthy. In consequence, the World Bank and IMF together are proposing an expedited process to support developing countries so that their economies and their communities do not really get into crisis.
On the other hand, the ADB responded to Covid-19 by announcing a massive US$20 billion package to help developing member nations weather the economic fallout from the coronavirus pandemic. According to the announcement, up to US$13 billion in loans would be made available to help virus-hit developing members fill in budget gaps, with another roughly US$2 billion set for the private sector.
It is important for all international lending agencies to use appropriate means to address the identified needs including existing and new financial assistance, emergency assistance lending, policy-based lending, debt relief, private sector investment, and knowledge and technical assistance. In a nut shell, the developing countries in Asia need extensive financial support to overcome the adverse economic and social impact of Covid-19 pandemic.
Sarwar Md. Saifullah Khaled is a retired Professor of Economics and Vice Principal at Cumilla Government Women's College, Cumilla.