With the COVID-19 outbreak weighing down on the economic expansion not only in China but also the rest of the world, UK-based Oxford Economics has downscaled its growth forecast for the Philippines for the first quarter and the entire 2020.
In a webinar on Thursday, Oxford Economics economists said they cut their first-quarter gross domestic product (GDP) growth projection for the Philippines to 6.2 percent from 6.5 percent for the month of January. For the full-year, Oxford Economics also cut its forecast to 5.9 percent from 6 percent previously—below the government’s 6.5-7.5 percent growth target for 2020.
Oxford Economics data showed the share of gross exports of intermediate manufacturing products from China to the Philippines’ manufacturing gross output was over 4 percent, while more than 10 percent of our total intermediate capital goods imports also came from the mainland.
The Philippines was among China’s top 20 export markets for core intermediate goods in 2018, cornering $19.2 billion worth or 30.8 percent of our imports.
According to Oxford Economics, the supply chains of Vietnam, South Korea and the Philippines would be the most vulnerable to coronavirus given their close ties with China.
Also, Oxford Economics earlier said “economies where travel and tourism accounts for a significant share of GDP and which are more reliant on Chinese tourists are likely to be impacted by this crisis the most, these include: Hong Kong, Macao, Thailand, Cambodia and the Philippines.”
The Philippines last year ranked 18th among the top destinations of outbound Chinese travelers.
In 2019, almost 30 percent of inbound tourists to the Philippines were Chinese.
Assuming coronavirus would be contained during the first quarter, Tom Rogers, head of macroeconomic consulting for Asia at Oxford Economics, said Singapore, Thailand and Vietnam would be the most affected in the region.
Oxford Economics expected the impact of the coronavirus, which has infected more than 80,000 and killed more than 2,700 mostly in China, would mostly happen in the first quarter. Travel, trade and manufacturing restrictions in and out of China could finally ease by the end of the second quarter.
“We cannot close down economies for a long time,” Oxford Economics’ head of Asia economics Louis Kuijs noted.
Rogers said when the economic impact of coronavirus would bottom out, affected economies should be able to resume their stalled growth trajectories. Firms were also expected to resume operations and catch up on production lags.
Stimulus such as public spending to build more infrastructure would also help economies recover, Rogers said.