Equivalent to 6.4-9.7 of global gross domestic product (GDP) as a result of the pandemic of the new coronavirus disease COVID-19. This is stated in a new report by the Asian Development Bank.
The updated COVID-19 Potential Economic Impact Assessment report indicated that economic losses in the Asia-Pacific region can range from 1.7 trillion USD for a scenario with a short holding period of three months to 2.5 trillion USD for a scenario with a long containment of 6 months. At the same time, the region accounts for about 30% of the total reduction in world production. The People’s Republic of China may suffer losses ranging from 1.1 to 1.6 trillion USD. The new analysis updates the findings presented in the Asian Development Outlook (ADO 2020), which predicted that global losses from COVID-19 will range from 2 to 4.1 trillion USD.
Countries around the world are quickly responding to the effects of the pandemic by introducing measures such as easing fiscal and monetary policies, increasing health spending and direct support to cover income losses. According to the report, government efforts can mitigate the economic impact of COVID-19 by 30-40%. This could reduce global economic losses due to the pandemic to levels ranging from 4.1 trillion to 5.4 trillion USD.
The analysis, which uses the estimated global equilibrium model as part of the global trade analysis project, covers 96 countries affected by the outbreak, with more than 4 million cases of COVID-19. In addition to the shocks associated with tourism, consumption, investment, trade and manufacturing, which are covered by the ADO 2020 estimates, the new report includes transmission channels such as increased trade costs affecting mobility, tourism and other industries; supply disruptions that negatively affect production and investment; and government policies that mitigate the global economic impact of COVID-19.
“This new analysis provides an overview of the very significant potential economic impact of COVID-19. It also emphasizes the important role of policy measures that can help mitigate economic damage. These conclusions can provide governments with appropriate guidance in developing and implementing measures to contain and suppress a pandemic and reduce its impact on the economy and population”, said ADB chief economist Yasuyuki Sawada.
The ADB Policy Action Database COVID-19 contains detailed information on key economic measures that ADB member countries are taking to combat the pandemic.
Under short and long containment scenarios, the report notes that border closures, travel restrictions and quarantines that were applied in countries affected by outbreaks to stop the spread of COVID-19 are likely to cut world trade by 1.72.6 trillion USD. Global job cuts will range from 158 to 242 million jobs, with the Asia-Pacific region accounting for 70% of total job losses. Labor income worldwide will be reduced by 1.2-1.8 trillion USD, 30% of which will be felt by the countries of the region, or from 359 billion USD to 550 billion USD.
In addition to increasing health spending and strengthening health systems, income and employment protection is needed to avoid a more complex and lengthy economic recovery. Countries should address supply chain disruptions; support and deepen electronic commerce and logistics for the delivery of goods and services; and to fund temporary social protection measures, unemployment subsidies, and the distribution of basic goods, especially food, to prevent a sharp drop in consumption, the report said.
On March 31, 120 million USD was received from the International Monetary Fund from two funds, Finance Minister, Baktygul Zheenbaeva, said at a meeting of the Ata Meken fraction on May 15, answering Saidulla Nashanov’s questions about external assistance.
The percentage is on average 0.7%, because from one fund it came in at 0%, in another – under 1%.
One fund has a grace period of three years, the second -5.5 years, Kyrgyzstan will pay in 10 years.
The day before yesterday, the IMF received the second tranche under the same conditions – 121 million USD, the are still in use and have not been used yet,” she said, noting that this was to support the budget.
In addition, 50 million USD is expected from the Asian Development Bank to support the budget, the board of directors has already approved the allocation, the Ministry of Finance will come to parliament for ratification next week, she said.
“We also expect 15 million USD from the European Union, the negotiations are ongoing today. We expect from the Eurasian Development Fund 100 million USD as a budget loan at 1% per annum for 20 years. The decision of the board of directors has not yet been, here we are waiting”, B. Zheenbaeva said.
Eurasian Development Bank, Russian Export Center, Organizing Committee of the competition “Regions – Sustainable Development” decided to conduct the annual international selection of investment projects “Eurasian Competition “Integration”.
It is planned that the first selection of projects will begin on September 1, and will last until December 1, 2020. When selecting projects, emphasis will be placed on high-tech industries, agribusiness, and the construction of infrastructure.
The Eurasian Integration competition will provide for a number of forms of financial and non-financial support for projects, including:
- Investment financing;
- Insurance products at the investment and operational stages of the project;
- Financial and operational leasing;
- Trade finance;
- Consulting services;
- Consulting services, including the structuring of export projects;
- Receipt by the initiator of the investment project of national support measures on the part of the EAEU member states.
Basic criteria for initiating projects:
- Implementation of an investment project in the EAEU state with the involvement of at least one technological, financial partner from another member state;
- Funding is allocated for the creation of a new construction project, the modernization of existing facilities, the launch of new products (services), the digitalization of industrial, infrastructure, industrial and other facilities;
- Amount of financing;
- From 50 million rubles;
- Amount of the initiator’s own participation in the project is from 20%;
- Loan term – up to 15 years.
“Cooperation in the implementation of investment projects in our countries opens the way to wide opportunities for both industrial and scientific-technical cooperation, and for increasing mutual direct and debt investments”, said Artak Kamalyan, Minister for Industry and Agriculture of the EEC.
As REC Director General, Veronika Nikishina added, in a difficult period for the global economy, it is necessary to restart the investment cycle, which can be implemented in cooperation between governments, development institutions and the largest financial organizations of the EAEU.
“Taking the initiative to launch the Eurasian Competition “Integration”, we are creating additional tools and prerequisites for the development of integration processes between the EAEU member states in the “post-coronavirus” period, support for investments and partnerships between entrepreneurs of states belonging to the Eurasian Economic Union”, said the chairman Organizing Committee of the Competition “Regions-Sustainable Development” Anna Belichenko.