SINGAPORE (Apr 3): The cost of the Covid-19 pandemic is expected to climb as high as US$4.1 trillion ($5.9 trillion), or almost 5% of the global gross domestic product (GDP), depending on the extent of the disease’s spread in the US, Europe and other major economies.

Meanwhile, a quicker containment of the virus could limit the economic slowdown to US$2 trillion, or 2.3% of global growth. These findings were unveiled in the Asian Development Bank’s (ADB) 2020 Outlook Report.

Developing Asia – comprising 45 countries including Singapore, China and India – is said to make up around 22% to 36% of the total cost of the pandemic.

“No one can say how widely the Covid-19 pandemic may spread, and containment may take longer than currently projected,” Yasuyuki Saswada, ADB’s chief economist said in an outlook briefing on Friday. “The possibility of severe financial turmoil and financial crisis cannot be discounted”.

As such, the region’s growth for 2020 is slated to slow to 2.2%, before rebounding to 6.2% in 2021 once the health and economic crisis tide over, notes the Manila-based lender.

The latest cut is a deviation from the 5.5% growth rate predicted by the bank last year.

In this time, inflation levels are expected to rise to 3.2% in 2020, from higher food prices, before eventually easing to 2.3% next year.

Other advanced economies such as the US and Europe are looking at a GDP contraction of 0.4 and -1.0 respectively, the ADB notes.

Southeast Asia’s economy is slated to contact 1% in 2020, before rebounding to 4.7% in 2021. Vietnam – a top performer who benefited from trade diversions during the trade war last year – is looking at the region’s worst slowdown of 4.8%, while Thailand is looking at a -4.8% contraction.

Singapore’s slowdown is forecast at 0.2% for 2020, on the back of the 0.7% growth it logged last year. This will follow with a rebounded growth of 2.0% in 2021, predicts the ADB.

“This will be the lowest growth that developing Asia will have seen in 22 years, or since the [1997/8] Asian Financial Crisis,” notes Abdul Abiad, director of ADB’s macroeconomic research division.

“This is a public health crisis and that’s what needs to be addressed first, before the situation normalises,” he says, adding that governments must ensure the “most vulnerable are not left behind”.