The magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain
by DASHVEENJIT KAUR/ pic by ARIF KARTONO
MALAYSIA’S tourism industry may lose up to RM5.4 billion, or 0.36% of the country’s GDP this year due to fears of the Covid-19 virus, according to the Asian Development Bank (ADB).
ADB stated that in a moderate scenario — where precautionary behaviours and restrictions such as travel bans start easing three months after the outbreak intensified and restrictions were imposed in late January — losses could reach RM3.2 billion or 0.2% of Malaysia’s GDP.
In a best-case scenario, whereby the outbreak is contained relatively quickly, with travel bans and precautionary behaviours abating after two months (measured from late January, when the outbreak intensified and quarantines, as well as travel and other restrictions were imposed), ADB believes it would cost the country’s tourism revenue RM2.44 million or 0.16% of GDP.
The Manilla-based lender estimates a loss of between US$19 billion and US$45 billion (RM187.65 billion) in tourism receipts for the rest of developing Asia.
ADB chief economist Yasuyuki Sawada said the China-originated virus could slash global growth by 0.1% to 0.4%, with financial losses forecast to reach between US$77 billion and US$347 billion.
He noted that the magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain.
“The ongoing Covid-19 outbreak will have a significant impact on 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,” he said in a statement last Friday.
Sawada said global losses could reach US$156 billion, or 0.2% of global GDP in a moderate scenario, with the People’s Republic of China would account for US$103 billion of those losses — or 0.8% of its GDP.
According to him, the rest of developing Asia would lose US$22 billion, or 0.2% of its GDP.
“There are many uncertainties about Covid-19, including its economic impact. This requires the use of multiple scenarios to provide a clearer picture of potential losses,” he added.
According to ADB, from the information known at this point, several facts are pertinent. First, it belongs to the same family of coronaviruses that caused the SARS outbreak in 2003 and the MERS outbreak in 2012.
Second, the mortality rate (number of deaths relative 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, but substantially higher than the mortality rate for seasonal flu, which is less than 0.1%.
Third, even though it emerged 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,” a report by ADB stated.
“Despite having a similar infection rate yet lower fatality rate than SARS, total cases and fatalities from Covid-19 have already far surpassed the total for the 2003 SARS outbreak,” Sawada said.