The worst hit country across the entire Asia-Pacific region is expected to be Fiji with the economy there tipped to shrink by 4.9 per cent. Last year, of Fiji’s more than 900,000 international tourists around 600,000 came from either Australia or New Zealand.
It is also an important stopping point for many international cruise ships.
Other countries to be hit hard include Samoa (forecast to shrink 3 per cent this year), Vanuatu (minus 1 per cent) and Palau (minus 4.5 per cent).
Across south Asia, the bank believes Thailand will suffer a 4.8 per cent drop in economic activity, East Timor is tipped to see GDP contract by 2 per cent while the Maldives is bracing for a 3 per cent decline.
Most private sector economists are tipping the Australian economy to contract by at least one percentage point through the full 2020 calendar year.
Abdul Abiad, director of the development bank’s macroeconomic research division, said the bans on international travel would have the most direct impact on many countries in the region.
“The most important affect will be through tourism. It’s one of the main industries for many of these small countries,” he said.
“Over the last two or three weeks you have a seen a proliferation of travel bans.
“In some countries, like Palau and the Maldives, international tourism is about 40 per cent of GDP.”
Apart from the hit to tourism, the development bank believes small countries across the region will be affected by restrictions on the movement of labour and capital equipment, saying this could delay critical infrastructure that would then undermine economic stimulus initiatives.
The bank believes there will be rebound in 2021 with growth across the Pacific likely to be around 2.7 per cent. But that depends on restrictions to deal with the coronavirus outbreak being relaxed.
The bank said if the pandemic was controlled by a “short” containment period, it would deliver a $US2 trillion hit to global GDP of which $US628 billion would be borne by China.
But if the pandemic lingers, global growth would take a $US4 trillion hit. China’s share would barely grow as the rest of the world, including much of developing Asia, would take more of the financial pain.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.