Coronavirus: Asia-Pacific economies could pay greater price in ‘Pandemic 2.0’, MSD report says

Annual projected losses could hit US$11.8 billion for Singapore and US$13.8 billion for Hong Kong if Covid-19 infections were to worsen
The report found that the economic burden could reach 2.5 per cent to 5.5 per cent of GDP in Singapore, Hong Kong, Taiwan, Australia and South Korea

Coronavirus pandemic

Amy Sood

Published: 11:50am, 9 May 2023

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With infections soaring again in some parts of the Asia-Pacific, a new report suggests that if the Covid-19 situation were to worsen, it could cause a far more severe economic burden on key markets in the region.

The report, published by US drug maker MSD, also known as Merck in North America, found that in this projected “Pandemic 2.0” scenario, the economic burden could reach 2.5 per cent to 5.5 per cent of gross domestic product of five markets – Singapore, Hong Kong, Taiwan, Australia and South Korea.

Although the World Health Organization has declared an end to the Covid-19 public health emergency, medical experts in Hong Kong are still asking residents to remain vigilant.

Singapore has also reported a spike in Covid-19 infections, while the number of people hospitalised with the disease has been steadily climbing in the past eight weeks, according to data from the country’s health ministry.

People wear face masks to protect against the spread of the coronavirus at a night market in Taipei last month. Photo: AP

A surge in cases in Malaysia and the Philippines has also raised fears that hospitals in the Southeast Asian countries may be strained.

“We can’t predict what that [a Pandemic 2.0] will look like, but there is still potential for additional waves, and for new variants emerging as well,” said Garry Daniels, media spokesman for MSD.

“It is to reframe the conversation with some of those decision-makers and policymakers that we need to be prepared that the pandemic could evolve in a way that we are not potentially expecting.”

The MSD report said that if current pandemic conditions were to persist, the projected annual economic costs would be US$5.3 billion in Hong Kong, or 1.4 per cent of GDP.

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But in the case of “Pandemic 2.0”, which entails a higher infection rate and severity of disease, the cost could go up to US$13.8 billion, or around 3.8 per cent of GDP.

Similarly, in Singapore, current prevailing conditions would result in a total annual economic cost of US$2.6 billion (0.6 per cent of GDP), but worsening transmission rates could cost the country US$11.8 billion (2.8 per cent of GDP).

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Indirect costs far worse

One of the main takeaways from the report, Daniels said, was that the economic burdens of the pandemic were primarily driven by indirect costs.

The assessment considered two categories of expenses resulting from the pandemic: the direct costs of illness, which include the expenses incurred by healthcare systems in managing treatment facilities; and indirect costs, which include productivity losses due to missed work.

Up to 96 per cent of the total ongoing economic costs of the pandemic in the five markets came from these indirect costs, far exceeding direct costs across the board. And these costs are likely to persist in the long term.

“The indirect costs estimated in this evaluation are likely to remain high even with a transition from the pandemic to endemic phase of Covid-19,” the MSD news release said.

People are seen wearing face masks, in Melbourne, Australia, in July 2022. The total cost of the pandemic based on current infections and severity was US$17 billion for Australia, according to the MSD report. Photo: EPA-EFE

In Australia for example, the total cost of the pandemic based on current infection and severity was US$17 billion, according to the study. Out of this amount, US$1.9 billion was attributed to direct costs, and the remaining US$15.1 billion came from indirect costs.

“Some of the data that came through showed that areas such as logistics, the airline industry and the wider travel industry have been impacted and potentially have broader impacts moving forward in terms of economic costs and loss of productivity,” Daniels said.

“This gives a bit of an insight into what the full economic costs of the pandemic could look like, outside the direct costs to healthcare systems.”