National Economic and Development Authority (NEDA) divulged that despite the new coronavirus spreading quite far in wide as a public concern, its impact remains little as far as the Philippine economy is concerned. Its effect will be concentrated on internal tourism which is a weaker contributor to economic output, unlike other sectors.
Among the economic sub-sectors, inbound tourism that is 5% of the country’s gross domestic product (GDP), will be the one to get the short end of the stick in effect of nCoV as the government imposes travel restrictions for China, Hong Kong, and Macau, Socioeconomic Planning Secretary Ernesto said in admittance.
It will dent about 0.06% of GDP if the nCoV continues to persist for one more month at its current pace, according to NEDA’s preliminary estimation. If it extends up to 5 months, it’ll decrease up to 0.3% of GDP. If it stays on even up for 11 months, however, only as much as 0.7% of the country’s economic output will be affected.
From China, that is about a decrease of a quarter in the PHP450 billion spending of foreign tourists in the country.
All these estimates were established, assuming a 100 reduction in the number of tourists coming from China and a 10% reduction in the number of tourists coming from other countries. This also comes from the assumption that present interventions made in preventing the nCoV spread and interventions for the economy remain the constant.
“These assumptions are made on the steady-state of where we are now,” summarized Pernia, further stating that the tourism industry will undergo efforts to encourage domestic tourism amidst the negative impact on inbound tourism. In this case, offering promos by the airlines and hotels would likely attract more local travelers.
“Domestic tourism is bigger because if you combine the share of inbound tourism and local tourism, the share to GDP is 12.7 percent. So that is more than double foreign tourism,” said Pernia. “We might be able to make up what we lose in inbound tourism with domestic tourism.”
Trade Secretary Ramon Lopez also assured that the expected economic fallout from the nCoV is very little as Wuhan, the capital of Hubei province, only consists of 0.9% of the Philippines’ total trade with China.
“There is an impact on the supply chain as our manufacturers import parts to produce their products from Wuhan or Hubei but of course, when you cannot get your supply from Hubei or Wuhan, you will get from alternative sources so your operations here will not be affected. So that will further minimize the impact,” he explained.
Imports, on the other hand, Hubei, China accounts for only 1.2% of imports. Last year’s January to November, Philippine imports from China were valued at $22.56 billion. Even the shares regarding exports are also low, accounting for around 0.5% total, reaching $8.79 billion in January to November period last year.
Overall, about 20% percent is China’s share with the Philippines’ total trade, whereas the Philippines’ total trade is about 15% of overall GDP.