The Economic Impact of the COVID-19 Outbreak on Developing Asia
A new coronavirus disease, now known as COVID-19, was first identified in Wuhan, People’s Republic of China (PRC), in early January 2020. From the information known at this point, several facts are pertinent. First, it belongs to the same family of coronaviruses that caused the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 and the Middle East Respiratory Syndrome (MERS) outbreak in 2012.There are several channels through which the COVID-19 outbreak will affect economic activity in the PRC, the rest of developing Asia, and the world. These include a sharp but temporary decline in domestic consumption in the PRC and other outbreak-affected economies, and possibly investment if the outbreak affects views on future business activity; declines in tourism and business travel; spillovers of weaker demand to other sectors and economies through trade and production linkages; supply-side disruptions to production and trade (which are distinct from demand-side shocks spilling over through trade and production linkages); and effects on health such as increased disease and mortality as well as shifts in health care spending. Each of these are taken in turn.