Coronavirus 'could cost global economy $8.8tn' says ADB

People wearing face masks on an escalator in a shopping centre in Japan.Image source, Getty Images

The coronavirus pandemic could cost the global economy between $5.8tn and $8.8tn (£4.7tn-£7.1tn), according to Asian Development Bank (ADB).

That's more than double last month's prediction and equates to 6.4%-9.7% of the world's economic output.

It comes as measures to slow the spread of Covid-19 continue to paralyse economic activity around the world.

Globally authorities have taken aggressive action to cushion their economies from the outbreak's impact.

"This new analysis presents a broad picture of the very significant potential economic impact of Covid-19," the ADB's chief economist Yasuyuki Sawada said.

"It also highlights the important role policy interventions can play to help mitigate damage to economies," he added.

The ADB said the top end of the range was based on the assumption that curbs to movement and businesses operating would last six months, while the bottom end assumed the restrictions would remain in place for three months.

Central banks around the world have moved aggressively to cut interest rates and roll out massive stimulus measures to help combat the impact of the outbreak that has rocked financial markets and raised fears of a deep global recession.

Yesterday new figures showed the huge impact of Covid-19 on the world's biggest economy as the number of Americans seeking unemployment benefits jumped by almost 3 million last week.

Nearly a quarter of the US workforce is now claiming some form of benefits.

Earlier this week the chairman of the US Federal Reserve warned that America's economic recovery is likely to be slower than initially hoped.

Jerome Powell cautioned that the US faces a slow and painful economic recovery without more government relief.

At the same time it was estimated that the UK government's efforts to combat the coronavirus pandemic has risen to £123.2bn.

The Office for Budget Responsibility said it now expects annual borrowing to equal 15.2% of the UK economy, with increased cost of the government's furlough scheme being the main cause for the increase.