The Asian Development Bank (ADB) has voiced concerns in a new analysis report that the ongoing coronavirus (Covid-19) outbreak in Asia will have adverse effects on the regional economies including lower business, local demand, tourism, product linkages, health effects, and supply disruptions.
The evolution of the outbreak will determine the magnitude of the effect on the economy of the region, the bank said in a press release. The analysis predicts a global impact of $77 billion to $347 billion, which amounts to about 0.1-0.4% of the Gross Domestic Product (GDP).
In a moderate scenario, where precautionary behaviours and restrictions such as travel bans start easing 3 months after the outbreak intensified and restrictions were imposed in late January, global losses could reach $156 billion, or 0.2% of global GDP. China would be the most hit, with $103 billion of those losses—or 0.8% of the Chinese being direct towards China.
The rest of developing Asia would lose $22 billion, or 0.2% of its GDP.
The global impact on the fashion industry is also profound with nearly 40% global buyers option out at a time when the influence of the Chinese consumer had just skyrocketed.
Chinese factories are also reporting layoffs and even unit shutdowns as incoming orders have come to a standstill. “There are no orders, no buyers, because of the virus we are going to shut down,” said Aye Su Than, who is five months pregnant and makes about US$130 per month working at a factory in Myanmar.
Another country deeply hit by the covid-19 outbreak is Bangladesh, with its main export – readymade garments – deeply affected by the unavailability of raw material that it imported mainly from China. “There is an impact, as all raw materials come from China. We are now trying to divert the mode of transport and are trying to airlift the goods, as production is already running with a delay of 2-3 weeks,” said Prithu, supply chain manager at Crystal Martin.
Although major retail brands have other supply networks that they can shift to from China while the country struggles to put a lid on the outbreak, but sourcing lines are deeply intertwined and factories in other South Asian countries rely on China for many of their supplies like buttons, zippers, and cloth. Cambodia recently reported that at least 10 factories had applied for a suspension of operations and said they would pay partial wages to their 3,000 workers.
Pakistan is among the 20 countries most affected by the global effects of China’s slowdown through global value chains.
Disruption in the supply chain are negatively affecting Pakistan’s textile and apparel industry, revealed a report by the United Nations Trade and Development (UNCTAD). The report, Global trade impact of the Coronavirus (COVID-19) Epidemic, Pakistani textile and apparel industry would face a supply chain affect to the tune of $44 million after a 2% reduction of Chinese exports in intermediate inputs.
