The Asian Development Bank (ADB) estimates that the coronavirus (COVID-19) outbreak could cause a decline in tourism revenue for Brunei Darussalam by as much as -0.086 per cent of gross domestic product (GDP) in the best case scenario (-USD11.7 million), -0.113 per cent in the moderate case (-USD15.3 million) and -0.192 per cent in the worst case (-USD26.1 million).
This was highlighted by ADB last Friday, indicating that COVID-19 could reduce global GDP by 0.1-0.4 per cent, with financial losses forecast to reach between USD77 billion and USD347 billion.
In a report titled ‘The Economic Impact of the COVID-19 Outbreak on Developing Asia,’ ADB said that economic growth in China and developing Asia, excluding China, could be trimmed by 0.3 to 1.7 per cent and 0.2 to 0.5 per cent, respectively.
“There are many uncertainties about COVID-19, including its economic impact,” said ADB Chief Economist Yasuyuki Sawada. “This requires the use of multiple scenarios to provide a clearer picture of potential losses. We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak.”
Given large uncertainties, the ADB gave several scenarios such as best case, moderate case, worse-case and the hypothetical worst case to assess the impact of COVID-19 on various developing countries in Asia.
The best case scenario is when outbound tourism drops by 50 per cent for two months. For economies imposing travel bans, there are no tourism receipts from the People’s Republic of China (PRC) for two months.
A moderate case scenario is where precautionary behaviours and restrictions such as travel bans start easing three months after they were imposed in late January.
Meanwhile, the worst case scenario is when outbound tourism drops by 50 per cent for six months.
For economies imposing travel bans, there are no tourism receipts from the PRC for six months.
The ongoing COVID-19 outbreak affects the 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.
Another important channel though which economies will be affected is tourism and business travel, in the PRC and other economies.
Tourism is an important source of revenue for many economies in developing Asia-international; tourism receipts account for more than 40 per cent of the gross domestic product in economies like Palau and Maldives for example, and travel and tourism (including domestic tourism) exceeds 10 per cent of GDP in almost half of ADB’s members.
Importantly, Chinese visitors now comprise a significant share of tourists in many of these economies, as the number of outbound tourists from the PRC has increased eight-fold from less than 11 million in 2003 to close to 87 million by 2018.
In 2018, tourists from the PRC accounted for more than a quarter of total tourist arrivals in Myanmar, Thailand, Mongolia, the Republic of Korea, Vietnam, Cambodia, Palau, and Hong Kong, China.