PHILIPPINE economic growth is likely to take a hit from a global coronavirus outbreak, with trade and tourism bearing the brunt, according to a Union Bank of the Philippines, Inc. note.
The country’s gross domestic product (GDP) growth could decline by 0.3% to 0.8% this year “if and when the outbreak lasts at least six months,” the lender’s Economic Research Unit said in a note emailed on Friday.
The estimate is based on the severe acute respiratory syndrome (SARS) outbreak in 2002 to 2003 when growth rates of Southeast Asian economies declined by an average of 0.5% when the situation lasted for seven months, the bank said.
The Philippine economy grew by 5.9% last year, its slowest pace in eight years and missing the government’s minimum goal of 6%.
“If this outbreak delivers a severe, but temporary impact, like SARS, the economic impact on the Philippines is very likely to be very minimal,” according to the note. “It may take time for the movement of people to return to normal, though.”
Philippine industries likely to be hit are tourism, which is part of the retail and service sector, and trade given that China is one of the country’s major trading partners.
More than 1.5 million Chinese visited the Philippines in the 11 months through October, making China its No. 2 tourism market after South Korea, according to data from the Tourism department.
Tourism accounted for 12.7% of Philippine GDP in 2018, according to government data.
“The Philippines may stand to lose a minimum of $126 million worth of foreign tourist spending this 2020 as the coronavirus scare continues to sow fear in the short term,” it said.
Foreign tourists spend an average $84 a day, the lender said, citing 2010 data from the Philippine Statistics Authority.
Meanwhile, the coronavirus scare could “slow a steady and burgeoning source of foreign exchange” from tourists.
“The more likely and direct impact on the economy will be on the consumption front as global travel is expected to slow altogether,” ING Bank-NV Manila senior economist Nicholas Antonio T. Mapa said in a separate note.
Trade, specifically Philippine exports may “continue to be flattish amidst this worldwide health emergency”, according to the Union Bank note.
“With the US-China trade issue partly settled with the so-called phase 1 trade deal and the global economy still to see a turning point signaling a clear growth recovery, export performance growth many continue to be sluggish this Q1 2020,” it said. — Luz Wendy T. Noble