India’s GDP may shrink by Rs 2 lakh crore in case of major coronavirus outbreak, says ADB
March 7, 2020: In a brief on the impact of novel coronavirus on Asian economies released by Asian Development Bank (ADB) on Friday had estimated that India may lose Rs 2.2 lakh crore in a hypothetical worst-case scenario of an outbreak in India.
March 7, 2020: In a brief on the impact of novel coronavirus on Asian economies released by Asian Development Bank (ADB) on Friday had estimated that India may lose Rs 2.2 lakh crore in a hypothetical worst-case scenario of an outbreak in the country
The brief named ‘The Economic Impact of the COVID-19 Outbreak on Developing Asia’ also reported that transport services in the country will lose up to Rs 14.28 thousand crore in the same scenario.
The range of scenarios explored in this brief suggests a global impact of Rs 25.67 lakh crore or 0.4% of global GDP. Two-thirds of the impact falls on the PRC, where the outbreak has been concentrated so far.
A new study from ADB’s respected development economics team provides a first look at the potential economic impact of #COVID19 on Asia. It considers how the outbreak will affect countries under a range of scenarios.— Asian Development Bank (@ADB_HQ) March 6, 2020
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“The ongoing COVID-19 outbreak affects the People's Republic of China (PRC) and other developing Asian economies through numerous channels, including sharp declines in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions, and health effects. The magnitude of the economic impact will depend on how the outbreak evolves, which remains highly uncertain. Rather than focusing on a single estimate, it is important to explore a range of scenarios, assess the impact conditional on these scenarios materializing, and to update the scenarios as needed,” says the brief.
How Covid-19 affect Asian economies?
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 the 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 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 health care spending. Each of these are taken in turn.
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