China virus to make PH tourism, exports suffer
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Tue, 04 Feb 2020 16:30:11 +0000
THE 2019 novel coronavirus acute respiratory disease (2019-nCoV ARD) that broke out in China and has spread overseas would likely drag growth in the Philippines’ tourism and export sectors this year, Finance Secretary Carlos Dominguez 3rd said on Tuesday.
Dominguez’s view was shared by a number of analysts, who estimated that the virus’ impact on the local economy would reach between $300 million and $600 million.
“A significant impact on the economy [would] most likely be centered on the tourism sector,” Dominguez told a Senate hearing on Tuesday.
According to him, travel restrictions imposed by the government to protect Filipinos’ health would likely decrease the sector’s direct gross value added.
Latest data from the Department of Tourism (DoT) showed that the number of foreign tourists in the country reached 7.48 million in the first 11 months of 2019, up 15.58 percent from the year-ago figure. Tourists from mainland China were the second-highest in the period, with 1.62 million.
Although Dominguez emphasized that it was still too early to determine the economic impact of these restrictions, he said the DoT had committed to continue looking for opportunities in partnership with industry stakeholders.
“The agency will intensify the promotion of domestic destinations for local travelers who have decided to postpone or forego international travel for the time being,” he added.
The Finance chief also said the lockdown imposed by Beijing on the city of Wuhan — considered a hub of transport and industry in central China, and where the virus originated — could create some supply-chain problems that would affect trade elsewhere.
Since China is the Philippines’ top trading partner, Dominguez said this would have an effect on Manila’s outbound shipments.
“In the immediate term, the temporary closures of factories in China and possible disruption in global supply chains may cause a temporary [and] slight decline in our exports, particularly of electronics and auto parts,” he said.
More than half of Philippine exports to China last year were of electronic parts, according to Dominguez.
With this, the Finance chief said the Department of Trade and Industry had committed to work closely with affected Chinese and China-based companies that would be looking to strengthen their operations by adding a production site outside the East Asian country.
‘When China sneezes’
Security Bank Corp. chief economist Robert Dan Roces said tourism would be the first to be hit by 2019-nCoV since China was the second-largest tourist market after South Korea.
“Other vulnerable sectors include airlines, gaming, lodging and leisure,” he added.
Roces projected probable losses to Philippine growth could reach $300 million (-0.1 percent) a quarter from tourism and external trade losses alone.
For his part, ING Bank Manila senior economist Nicholas Antonio Mapa said the virus’ impact on tourism and trade could hit as high as $600 million.
“In this case, when China sneezes, the Philippines catches a cold and picks up a cough given recent developments in economic ties,” he added.