Softening the blow of COVID-19 impact

Azlan Othman

The unprecedented COVID-19 pandemic has caused a strain on economies around the world, with estimated USD5.8-8.8 trillion losses predicted in the absence of coordinated responses, according to an Asian Development Bank (ADB) report last week.

As a result, nations have been putting forward economic packages to soften the blow of the impending fallout, which includes Brunei Darussalam.

The ADB reported that the Sultanate has the eighth largest COVID-19 economic package in Southeast Asia, at USD381.1 million (BND450 million) or 2.7 per cent its gross domestic product (GDP).

As of May 4, the report continued, Southeast Asia has committed to some USD1.9 trillion to fight the pandemic with Thailand topping the list at USD82.5 billion, followed by Indonesia at USD57.9 billion, Singapore at USD45.1 billion, Malaysia at USD32.5 billion, Vietnam at USD26.2 billion, the Philippines at USD16.7 billion, Cambodia at USD2.1 billion, Brunei at USD381.1 million, East Timor at USD250 million, Myanmar at USD98.6 million and Laos at USD3.4 million. However, when the population is taken into account, the Sultanate’s economic response per capita is at USD741.61, surpassing Vietnam’s USD274.02, Indonesia’s USD216.58, East Timor’s USD197.17, the Philippines’ USD156.39, Cambodia’s USD127.39, Myanmar’s USD1.84 and Laos’ USD0.48.

Meanwhile, Singapore has the highest package per capita at USD7,990.93, followed by Thailand at USD1,188.77 and Malaysia at USD1,031.32.

ADB Chief Economist Yasuyuki Sawada said the Bank more than doubled its estimation of global economic losses due to the coronavirus compared to the previous month of April.

“Economies with domestic outbreaks and strict lockdowns will be the hardest hit as domestic demand weakens sharply,” the ADB report said. “More open economies and those that are tourism- or commodity-dependent will also suffer from the collapse in global demand.”

It added that containing the pandemic “is key to reducing the economic cost”, and among the essential elements to containment are sufficient testing, tracing and isolation; effective social distancing; and sufficient supply of protective and medical equipment.

The report also emphasised on the importance of governmental support for “struggling families and businesses to mitigate adverse impacts of the pandemic and to avoid long-term consequences for growth and development”.

ADB’s analysis has found that stimulus packages will reduce COVID-19’s global impact by 30-40 per cent, or USD4.1-5.4 trillion.

Meanwhile, “rapid and effective containment will allow for faster recovery”, the report said. “It is critical to identify industries and occupations in terms of essentiality and economic importance, and their ability to operate safely with adequate social distancing.”

ADB also cautioned against hasty re-opening of the economies.

“Governments should re-open the economy sequentially, balancing health risks and economic considerations, and being ready to tighten if outbreaks reoccur,” it said, adding that it is thus imperative to have “adequate data and information”.