The Asian Development Bank (ADB) said the on-going outbreak of the virus known as COVID-19 will have a significant impact on Asia’s developing economies.
In its latest analysis, the ADB said there will be sharp declines in domestic demand, tourism and business travel and trade, plus serious disruption to production links and supply chains.
In a worst-case scenario for Cambodia, the ABD estimates that the Kingdom’s decline in tourism revenues could be $856.5 million, which translates to about 3.5 percent of the county’s GDP.
Last year, the Kingdom welcomed 6.6 million tourists, a 7 percent increase from the year before. The sector generated approximately $5 billion and accounted for 12 percent of the country’s GDP. This year, however, the Ministry of Tourism has already predicted that Cambodia will experience a reduction of one million tourists, resulting in a 10 percent loss of revenue for the tourism sector.
Tourism is an important source of revenue for many developing economies in Asia, with the report highlighting that international tourism receipts account for more than 40 percent of the gross domestic product (GDP) in economies like Palau and the Maldives.
One of the biggest contributors to the fall in tourist numbers in developing Asian countries will be the blanket ban on Chinese nationals leaving their country in the wake of the virus. From less than 11 million outbound tourists in 2003, close to 87 million were recorded by 2018.
Cambodia’s garment industry is also currently badly affected due to the shortage of raw materials coming from China as some factories temporarily suspend operation. The sector relies on 60 percent of its raw material imports from China. However, there is positive news as the Chinese Embassy this week confirmed that 60 containers of raw materials are due to arrive at the Sihanoukville Autonomous Port on Monday. The cargo includes textiles, buttons and zips, all bound for garment factories.
This should alleviate fears within the industry of job losses. Last month, Labour Ministry spokesman Heng Sour forecasted that approximately 90,000 workers from more than 200 factories in the Kingdom could be suspended if the necessary supplies did not arrive from China.
In the bigger picture, the ADB said the magnitude of global economic losses will depend on how the outbreak evolves, which remains highly uncertain. The analysis suggests that between $77 billion to $347 billion could be haemorrhaged, or 0.1 to 0.4 percent of the global gross domestic product (GDP).
In a moderate scenario and factoring in the precautionary behaviours and restrictions, such as travel bans, imposed three months after the outbreak, global losses could reach $156 billion, or 0.2 percent of global GDP. The People’s Republic of China would account for $103 billion of those losses – or 0.8per cent of its GDP. The rest of developing Asia would lose $22 billion, or 0.2per cent of its GDP.
In response to the ongoing crisis, Asian economies are already responding to the COVID-19 outbreak in various ways, with governments mobilising inter-agency task forces and other coordinating mechanisms to ensure a harmonised response.
Cambodia’s own government says it has accumulated approximately $400 million in savings to be used for COVID-19 emergency cases in the Kingdom. Meanwhile, the Finance Ministry has already disbursed $30 million to the Health Ministry to aid the fight against the virus in the country.
- Tags: COVID-19