By Charmaine A. Tadalan and Beatrice M. Laforga
THE National Economic and Development Authority (NEDA) estimated up to 60,000 jobs in the tourism and manufacturing sectors may be lost if the coronavirus disease 2019 (COVID-19) outbreak persists until June.
“In terms of jobs, we’re looking at potential losses of between 30,000-60,000 jobs,” NEDA Undersecretary Rosemarie G. Edillon told the Senate economic affairs committee during Monday’s hearing on the COVID-19 impact on the economy.
She reiterated NEDA projections that the COVID-19 outbreak may cut gross domestic product (GDP) growth by 0.3-1% if it continues until end-2020.
“With respect to impact on GDP growth, impact is 0.3-1%… Ang scenario natin dati, ang (full-year GDP) target 6.5-7.5%, then we’re looking at 5.5-6.5% (this year),” Ms. Edillon said.
In 2019, the Philippine economy grew by 5.9%, below the 6%-6.5% full-year target set by the government.
The NEDA said the tourism industry is facing a possible 1.42-million reduction in foreign tourist arrivals this year, as two of its biggest sources of tourists — China and South Korea — try to contain the spread of the virus.
Of the 8.26 million visitor arrivals last year, South Korean tourists accounted for 1.98 million, followed by Chinese tourists (1.74 million).
The NEDA estimated the tourism industry’s foregone gross value added to reach between P93-187 billion.
At the same time, Ms. Edillon said the government has yet to receive any reports of significant job losses in the exports industry.
“Right now, we’re saying there are other exports market, pwedeng i-diversify. So far we have not received significant (report),” she said.
With these developments, the NEDA proposed that Congress allow Philippine exporters to temporarily sell their products in the domestic market, as well as approve the P2-billion supplemental budget requested by the Department of Health.
“We are requesting that we allow exporters to sell to the domestic market, according to the FIA (Foreign Investments Act), if they’re in the (economic) zone they should be exporting 70%,” Ms. Edillon said.
She also said the NEDA will look into whether this could be permitted through a Philippine Economic Zone Authority (PEZA) board resolution or executive order, considering there are only two session days left before Congress goes on a seven-week break.
The Confederation of Wearable Exporters of the Philippines, for one, said it has started implementing temporary forced leaves for workers.
“This is our measure when the supplies are not coming in because the whole supply chain is affected, so we’re doing temporary forced leave in some of the factories,” Executive Director Maria Teresita Jocson-Agoncillo.
Ms. Agoncillo said there is an “average of 3,000 workers per factory, we try to minimize 10%, 5% on forced leaves.”
Global supply chains have been disrupted, as Chinese factories are affected by the COVID-19 outbreak. Initial data from the Customs bureau showed imports from China, the country’s biggest trading partner, dropped by 34.7% in terms of volume in February.
In an economic research note yesterday, JPMorgan said the Philippine manufacturing sector will be the “least affected” by the virus fallout in the emerging market (EM) Asia region, alongside Indonesia.
”The COVID-19 outbreak would negatively affect manufacturing activity in EM Asia, through two possible channels: shortages of Chinese parts and softer demand from China,” JPMorgan said.
JPMorgan expects the Philippine economic growth to slump to 4.1% in the first quarter, before recovering to 5.8% and 5.3% in the second and third quarters and again slowing to 4.6% in the fourth quarter. It forecasts full-year GDP growth at 6.2%.
LOWER GROWTH FORECAST
The combined impact of the Taal Volcano eruption in January and the ongoing coronavirus outbreak may slash first-quarter GDP growth by 0.4-08%, according to a joint report by First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).
“The negative impact of the Taal Volcano eruption and Metro Manila consumers avoiding malls with the lingering COVID-19 impact on tourism may only result in a 0.4% to 0.8% reduction in GDP growth in Q1-2020 but still robust enough to be a top performer in ASEAN-6,” the report read.
Sought for comment, Socioeconomic Planning Secretary Ernesto M. Pernia said in a mobile phone message that the first-quarter growth is “hard to tell” so far.
FMIC and UA&P also placed its full-year GDP growth forecast at 5.9%, lower than the 6.5-7.5% official target range.
If the outbreak ends by summer season, FMIC and UA&P expect a recovery starting the second quarter or “faster growth pace” in the second half, as the economy is largely driven by domestic demand.
Despite the negative news, FMIC and UA&P said this “should not make us oblivious of the solid fundamentals of the economy.”
On inflation, FMIC and UA&P said they “expect a further slowdown on m-o-m (SAAR) basis in February and March as crude oil and commodity prices have plunged as COVID-19 put brakes on China and the world economy’s recoveries.”
Inflation eased at a slower-than-expected 2.6% in February on softer price increases of food, transport and utilities, from 2.9% in January. This brought year-to-date inflation to 2.8%, well within the central bank’s 2-4% target for the whole year.
For the full year, they expect strong government spending, improvements in manufacturing sector and continued implementation of public-private projects “should provide the added impetus” for the overall growth.
“To help reach its growth targets, BSP (Bangko Sentral ng Pilipinas) cut policy rates by 25 bps (basis points on February 6th and will likely cut by another 25 bps in March in the light of COVID-19’s sting in Q1,” the report added.
On Monday, the Health department announced 10 more confirmed cases of COVID-19 in the country, bringing the total to 20 so far.
The administration’s economic team will meet on Tuesday to further assess the potential impact of the outbreak fallout to the economy and its most affected sectors.