BANGKO SENTRAL ng Pilipinas (BSP) Governor Benjamin E. Diokno downplayed economic risks that may arise from the continued spread of the novel coronavirus from Wuhan, saying the Philippines’ exposure to China is not that significant.
Mr. Diokno assured that the Philippines’ trade with China is not as significant compared to Beijing’s trade relations with other economies in the Association of Southeast Asian Nations (ASEAN).
“’Yung estimate nila, di naman tayo masyadong ano (Based on their estimate, we are not so much affected)… Siguro ’yung merong…there’s a lot of trade with China…like Vietnam or Thailand, ’yun may problema ka talaga ’dun (Maybe countries that have a lot of trade with China like Vietnam or Thailand, they’ll really have a problem),” he told reporters on the sidelines of the BSP’s Annual Reception for the Banking Community held in Manila on Friday.
“Lockdown na rin ’yung province (The province where it originated from [Wuhan] has been locked down), so as long as we don’t get those people, okay lang tayo (we are okay). At saka this is less severe than SARS (Severe Acute Respiratory Syndrome)… Don’t scare yourself. But avoid travelling,” Mr. Diokno said.
Reuters reported that more than 2,000 people around the world have already tested positive for the novel coronavirus. Casualties have also risen to 56 as of early Sunday morning. (Read related story “Over 2,000 infected with coronavirus” on S2/5)
South China Morning Post cited a report released by the Economist Intelligence Unit on Thursday which said the economic impact of the virus for China and potentially elsewhere could be “significant if the virus continues to spread.”
The report added that between 0.5 to 1 percentage point could be reduced from China’s gross domestic product growth in 2020 due to the virus.
Latest data from the Philippine Statistics Authority (PSA) showed China was the biggest supplier of imported goods to the Philippines in November, with a 22.9% share in total imports. Import payments from China rose to $2.05 billion during the month from $1.8 billion in the comparable year-ago period.
As of Sunday, there is no confirmed case of the virus in the country.
EFFECT ON TOURISM
Analysts, meanwhile, said the tourism industry could be affected as the country has seen an influx of mainland Chinese spending their holidays here.
According to data from the Department of Tourism (DoT), China was the second top tourism market of the Philippines, next to South Korea. More than 1.5 million Chinese visited the country in the first 10 months of 2019, 41% higher year on year. This represented 22% of the total 6.74 million foreign tourist arrivals during the January to October period.
“Tourism is first to be hit. People will have to keep away from crowds, so retail and other recreational activities are put on hold,” UnionBank of the Philippines Inc., Chief Economist Ruben Carlo Asuncion said in a text message.
He, however, noted economic risks coming from the virus are still “hard to estimate at this point.”
“Compared to SARS, some say that Chinese authorities are more quick to their feet now,” Mr. Asuncion said.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the effect of the virus on the tourism sector will be “temporary.”
“The Philippine economy, compared to other Asian countries, is less dependent on foreign tourism business as a source of economic growth,” Mr. Ricafort said in a text message.
Data from the PSA showed the tourism industry’s contribution to the gross domestic product (GDP) was at 12.7% in 2018, up by 0.5% from its contribution in the preceding year. This represents P2.2 trillion of GDP.
“The adverse effects of any slowdown in tourism business due to the coronavirus, especially if temporary and contained, could have less impact on the local economy,” Mr. Ricafort added.
Sought for comment, Tourism Secretary Bernadette Fatima T. Romulo-Puyat said they are working closely with DoH on how to handle the situation.
“The DoT relies on the expert and timely advice of the DoH in handling the coronavirus situation. The DoT’s priority at this time is the safety and the welfare of our tourists and local communities,” Ms. Romulo-Puyat said in a text message.
The Civil Aeronautics Board already ordered the suspension of all flights linking Wuhan to the Philippines last Friday.
In a note sent to media on Thursday, Fitch Ratings said global corporates exposed to travel and tourism would be the most exposed to risk of being affected by the coronavirus outbreak.
“The global airlines, gaming, lodging and leisure sectors are vulnerable to pandemics that influence consumer behavior,” Fitch Ratings said in the report.
Fitch noted that among the economies with Chinese travellers making up a significant percentage or more than a third of their total tourists are Hong Kong (78.3%), South Korea (34.7%), Cambodia (32.7%), Vietnam (32.2%) and Japan (30.1%).
“Operational disruptions caused by idiosyncratic events — including disease outbreaks, acts of terrorism and even weather — are a perennial risk faced by these sectors,” it added.
The report said a sharp escalation in the outbreak will mainly affect Asian economies.
“Service sector activity, particularly in fields associated with tourism, would be most vulnerable, which could leave economies such as Thailand, Vietnam and Singapore exposed, along with Hong Kong and Macao, both of which are already on negative outlook,” the report said. — Luz Wendy T. Noble with Reuters