NEW DELHI: The coronavirus pandemic is expected to dampen economic growth "substantially" in the South Asian region, including India, and though the central banks and governments have responded by providing stimulus, the measures will not come close to offsetting the loss of economic activity, says a report.
The Economist Intelligence Unit (EIU) said dense living conditions, low hygiene awareness and overburdened healthcare systems make the South Asian region vulnerable to the worst effects of an outbreak.
"Chronic underinvestment in healthcare infrastructure and a low number of doctors and hospital beds in relation to the population mean that health systems will not be able to cope with the further toll, exacerbating the spread of the virus and the death rate," EIU said.
India has imposed a three-week long nationwide lockdown, the most far-reaching measure undertaken by any government, to curb the spread of the coronavirus pandemic that has killed at least 29 people in the country so far.
According to EIU, the preventive measures taken by governments will curtail the movement of people and lead to a demand-side shock, while the closure of factories and businesses will result in a supply-side shock, and the subsequent lay offs will exacerbate the demand shock.
The EIU expects countries to provide fiscal and monetary stimulus, although the scope of such measures will vary.
"India and Bangladesh, given their stronger economic positions, will be able to provide relatively more; meanwhile, measures in Pakistan and Sri Lanka will be more limited," EIU said, adding that the stimulus provided by the central banks and governments will not come close to offsetting the loss of economic activity.
Indian government has announced a Rs 1.7 lakh crore package, including free foodgrains and cash to poor for the next three months.
Moreover, in order to counter the economic fallout of coronavirus pandemic, the Reserve Bank of India on March 27 allowed banks to put on hold EMI payments on all term loans for three months, slashed the cost of fresh borrowing by cutting policy interest rate by steepest in more than 11 years and infused a massive Rs 3.74 lakh crore liquidity.
The EIU further noted that though the number of cases in South Asia has grown swiftly, with Pakistan and India recording the steepest rises, the number of confirmed cases is being "underreported".
"We believe that the number of confirmed cases is being underreported, primarily because of a lack of widespread testing.
India, for example, had carried out around 10 tests per million people by March 20th; in comparison, Vietnam had conducted 160 tests per million people by the same date," it said.
The number of deaths around the world linked to the coronavirus has touched nearly 34,000. In India, the tally of confirmed coronavirus cases crossed the 1,000-mark.