COVID-19 will cost the global economy US$10 trillion
The numbers are colossal and may still be an underestimate.
In an analysis based on World Bank statistics and economic assumptions, The Economist has calculated that the world economy probably shrank by 4.3 per cent in 2020, a setback it says is “matched only by the Depression and the two world wars”.
But this dramatic figure still understates the cost. It measures the world economy’s fall from where it was before the pandemic, not from where it would have been had the virus not spread.
Before the coronavirus, global GDP was expected to expand by 2.5 per cent in 2020 to US$86 trillion. Compared with that figure, the shortfall of global GDP last year was probably more like 6.6 per cent. That is equivalent to about US$5.6 trillion.
The World Bank projects the world economy to grow strongly in 2021, helped by the roll-out of vaccines. But even if this expectation is met and no further calamities intrude, the level of output in 2021 will remain 5.3 per cent below the bank’s pre-pandemic projections: a further shortfall of almost US$4.7 trillion.
Put these two numbers together and the cost of COVID-19 this year and last will amount to about US$10.3 trillion in lost output: goods and services the world could have produced had it remained unafflicted.
“That is, to put it mildly, a big number,” says The Economist.
‘The world economy probably shrank by 4.3 per cent in 2020, a setback matched only by the Depression and the two world wars.’