Covid-19 may cost global economy $35.3 trillion by 2025

The world economy will suffer a loss of $17.3tn this year if a vaccine is not developed

The New York skyline. The coronavirus pandemic has tipped the global economy into its deepest recession since the Great Depression, according to the International Monetary Fund. Getty Images

The Covid-19 pandemic may result in a cumulative global gross domestic product loss of $35.3 trillion (Dh129.6tn) through 2025 in case a vaccine to inoculate against the disease is not developed by then, according to research from Australian National University.

This worst case scenario forecasts waves of the pandemic to keep on emerging until 2025 and countries that enforced movement restrictions to curb its spread, eschewing shutdowns during future outbreaks.

Under the same scenario, the loss to the global economy in 2020 would be $17.3tn, according to the report.

In the best case scenario, where all countries experience only a single coronavirus wave in early 2020 and a milder outbreak again in early 2021, the loss to the global economy through 2025 would be $17.6tn, while for 2020, it would be $14.7tn.

This scenario estimates that the Covid-19 pandemic is at its worst today and will eventually improve, and a vaccine will eliminate future waves after 2021, the report added

The number of Covid-19 cases continues to rise in the US and India, while most countries in Europe are battling a second wave of infections. As of Thursday, there were more than 24.4 million global coronavirus cases, with about 16.9 million recoveries, and the death toll stood at more than 830,000, according to Worldometer.

The coronavirus pandemic has tipped the global economy into a recession, the worst since the Great Depression, according to the International Monetary Fund. In June, the multilateral lender forecast global GDP to shrink 4.9 per cent this year and make only a sluggish recovery in 2021.

All forecasts show a substantial negative shock to the global economy in 2020 with an expected rebound in 2021, but not at par with the pre-pandemic levels of GDP most countries recorded in 2019.

As nations closed borders and enforced stay-at-home restrictions, governments rolled out a range of fiscal measures to cushion the impact on the economies.

Fiscal measures to support businesses included tax rebates, targetted subsidies to hard-hit sectors and credit guarantees. Financial policymakers also launched fiscal measures to support households including relief from taxes and exemptions on utility bills. But wage subsidy was among the most essential fiscal relief measure, the research report titled Global macroeconomic scenarios of the Covid-19 pandemic, added.

Within the Middle East and North Africa, the Central Bank of the UAE was among the first to roll out an economic relief package of Dh100 billion to back companies and individuals affected by the coronavirus. Further easing of capital and liquidity buffers has since increased the size of the stimulus to Dh256bn.

In March, the US announced a $2.3tn relief package to support families and businesses affected by the pandemic. The country is now reviewing a second stimulus package that could run into trillions of dollars but politicians are at odds about its size and terms.

The UK has also launched a $39bn stimulus package to support its economy, while the European Union leaders have also agreed on a €750bn (Dh3.2tn) stimulus to help its member states cushion the blow of the coronavirus pandemic.

Governments around the world have also reallocated their budgets to increase spending on the healthcare sector and on infrastructure projects, a move critical in combating the pandemic now and in the future, the report added.