The novel coronavirus epidemic may cost the Philippines as much as $600 million in terms of output reduction this year, mostly on tourism and trade receipts, if the outbreak lasts for at least six months.
This was based on the research of Union Bank of the Philippines’ chief economist Ruben Carlo Asuncion and researcher Katrina Joy Javier, who revisited the 2003 SARS episode as reference in gauging the potential impact of the coronavirus contagion on the Philippines.
If this outbreak delivers a severe but temporary impact like SARS (Severe Acute Respiratory Syndrome), the research note projected that the Philippines would see a decline of at least 0.3 percent and at most 0.8 percent of annual gross domestic product (GDP) growth this 2020, if and when the outbreak is prolonged for half a year.
In dollar terms, Asuncion said that this could be equivalent to a potential reduction in economic output of at least $200 million (P10.18 billion) to as much as $600 million (P30.55 billion).
To date, infections from coronavirus across the globe have surpassed the level of those infected during the SARS outbreak in 2003. The epicenter of the outbreak is Wuhan, the capital of Hubei province in central China. There are now more than 12,000 confirmed cases worldwide while over 250 have died as of Saturday.
“Two areas of the Philippine economy quickly come to mind that will be hit by the novel corona virus outbreak: 1) Tourism connected to retail and services sectors, and 2) trade, particularly that of exports, China being one of the Philippines significant trading partner,” the Union Bank research said.
“If this outbreak delivers a severe, but temporary impact, like SARS, the economic impact on the Philippines is very likely to be very minimal. It may take time for the movement of people to return to normal though.”
In 2010, the Philippine Statistics Authority estimated that the average foreign tourist spent $84 a day. Last year, there were about 1.5 million tourists from China.
“Thus, 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. People movement-related businesses may also lose in the short term as people tend to stay rather than roam around risking unnecessary exposure to the largely unknown disease,” the research said.
The economists said Philippine exports might also continue to be flattish amid this worldwide health emergency.
With the US-China trade war partly settled with the so-called phase 1 trade deal and the global economy yet to turn the corner toward a clear growth recovery, the economists said the country’s export performance might continue to be sluggish this first quarter of 2020.
In estimating the economic impact of coronavirus, UnionBank’s Economic Research Unit took its cue from the 2002-2003 SARS episode that resulted in an average decline of 0.5 percent in annual GDP growth for Southeast Asian economies, with the situation lasting for about seven months.
Based on Bloomberg Economics’ model, China’s GDP may soften to about 4.5 percent this first quarter of 2020 while the virus fallout could shave off 0.1 percent from both the economies of the United States and the euro area.
Since the SARS episode in 2003, China has become much more integrated into the global economy and the volume of travelers from the mainland has doubled. INQ