THE tourism industry alone could lose P22.7 billion in revenues per month amid the coronavirus disease 2019 (COVID-19) outbreak, with Philippines also seen to be among the most vulnerable countries that might suffer from disruptions in global supply chains after some factories in China halted operations.

This as the Department of Health (DoH) on Wednesday reported that the number of patients under investigation for the new coronavirus from China rose to 408.

“Applying ’yung (the) multiplier effect of tourism, we expect that per month, kasama na rin ’yung (including) domestic airline receipts, we think it’s (foregone revenue) in the order of about P22.7 billion per month,” National Economic and Development Authority (NEDA) Undersecretary, Rosemarie G. Edillon said in a hearing at the House of Representatives on Wednesday.

Tourism Secretary Bernadette Fatima T. Romulo-Puyat said their estimates showed the tourism sector could lose a total of P42.9 billion from February until April — P16.8 billion this month, another P14.11 billion for March and P11.98 billion for April — as citizens are expected to cancel scheduled flights and postpone events, among others, amid the virus scare.

For airlines, Roberto Lim, executive director and vice-chairman of the Air Carriers Association of the Philippines, Inc. (ACAP) said they are expecting to lose around P3 billion from ticket refunds in the next two months following the China travel ban.

NEDA’s Ms. Edillon added that if the outbreak persists up to six months, affected industries, including tourism-related businesses, could also lay off some workers.

Earlier, NEDA estimates showed a prolonged outbreak could reduce the country’s gross domestic product (GDP) by 0.3% if the virus lingers until June, while the impact could further rise to 0.7% if it persists until December. The projections were made considering inbound Chinese tourists will be cut by 100% and foreign tourists coming in will be reduced by 10% from the baseline during the given period.

The COVID-19 outbreak’s effect on China’s growth could also spill over to the region, including the Philippines, and will affect the aviation industry, tourism sector, services, and global supply chains.

ASEAN+3 Macroeconomic Research Office (AMRO) said in a report on Wednesday that the outbreak could slow China’s growth by 0.5 percentage point this year, and with widespread spillovers to the region, ASEAN+3’s growth could also be reduced by 0.2 percentage point.

Based on AMRO’s estimates culled from its Global Vector Autoregression (GVAR) model, a one-percentage-point decline in China’s economic activity would hit Thailand the most, along with Singapore and Hong Kong, while the Philippine economy will likely suffer a 0.27 percentage point reduction, same as Malaysia, Japan and South Korea.

“The main spillover channels to the region would be through a sharp drop in Chinese outbound travel and tourism, a drop in regional travel and tourism reflecting fear of contracting the disease, a decline in China’s imports through the supply chain as manufacturing production is disrupted and as domestic demand is affected, and the spread of the disease to regional economies,” AMRO explained in its analytical note published Wednesday.

Meanwhile, Oxford Economics said the Philippines is one of the countries most vulnerable to global trade disruptions, which could happen as the outbreak has forced some factories in China to temporarily halt their operations.

“The rapid spread of coronavirus will weaken China’s GDP (gross domestic product) growth sharply in the short term, causing disruption for the rest of the world,” Oxford Economics said in a Feb. 10 report. “Weaker Chinese imports and tourism and disruption to global supply chains will take a toll on the rest of the world, particularly in the Asia-Pacific region.”

According to Oxford Economics data, 30.8% of the country’s core intermediate goods that its imports come from China and Hong Kong, making the Philippines the third-biggest export market of China and Hong Kong combined.

“After Vietnam, the South Korean and the Philippines economies look vulnerable to coronavirus, based on this metric. The share of intermediate goods imports from China is in excess of 20% in all the other Asian economies on the list, bar Singapore.”

Philippine authorities earlier said the country could find other sources for the raw materials and goods it currently imports from China if supply will be disrupted.

However for Oxford Economics, “even if substitutes for Chinese suppliers exist, their capacity to increase production and meet global demand may be limited in the short term and could increase production costs across the supply chain.”

For the Economic Research Unit (ERU) of the UnionBank of the Philippines, Inc., the “Philippine economy’s significant trade exposure to China puts the anticipated export recovery this 2020 in a quandary ahead of China’s anticipated economic slowdown due to the still unknown eventual impact of the coronavirus outbreak.”

If the virus spreads further and stays longer, UnionBank’s ERU said it may also threaten the country’s remittance inflows, which is a major component driver of growth, particularly flows coming from China, Hong Kong, Macau and Singapore.

In a report on Wednesday, Moody’s Investors Service also warned that the fallout from the virus’ spread could also hurt the asset quality and profitability of Asia-Pacific (APAC) banks.

Considering disruptions in supply chains, Moody’s said banks in the Asia-Pacific region could suffer from potential loan defaults if the borrowers, specifically the companies involved in these sectors, will face prolonged suspensions in their operations.

“APAC banks provide working capital and investment financing for companies in supply chains. The main source of asset risk for banks in this area is financing for subcontractor or suppliers, rather than loans to major manufacturing companies. For example, if production is suspended for a prolonged period, subcontractors of major manufacturers can be at risk of default. Industries that can take a hit include technology and auto manufacturing,” the credit rater said.

Meanwhile, a more immediate impact will be felt by banks as private consumption is seen to decline amid the virus scare, “resulting in declines in earnings at corporates in industries that are reliant on consumer spending, such as general trade and commerce, mall operators and real estate firms.”

“This would lead to higher problem loans at the banks,” it said.

Moody’s added that while the market has already recovered from virus-related sell-offs, prices of financial assets could decline if the outbreak continues.

“While short-term volatility can be good for bank earnings from financial markets, sustained market declines will be credit-negative for the banks due to mark-to-market losses on financial investments and falls in revenue from financial markets,” the debt watcher said. — Beatrice M. Laforga and Genshen L. Espedido