A foreign bank said Monday the 2019 novel coronavirus will have more impact on the Philippines’ tourism industry than on the exports sector.
“We see that the nCoV outbreak might have minimum direct impact to exports, as trade with Hubei province account for less than 1 percent of total trade,” DBS Bank of Singapore said in a report.
“The bigger impact of nCoV would be on tourism, accounting for 5 percent of GDP, rather than on trade. Overall, we see risk of trade deficit to widen in the first half of 2020,” DBS said.
Local airlines suspended flights between the Philippines and China amid a temporary government ban on visitors from China, Macau and Hong Kong. Cathay Pacific, the flag carrier of Hong Kong, announced that it was cutting more than half of its flights and told its employees to take unpaid leaves.
China is the second-largest source of international visitor arrivals in the Philippines, with 1.26 million Chinese travelers visiting the country in 2018.
Finance Secretary Carlos Dominguez III said last week the tourism sector would be “badly hit” by the spread of the nCoV because of the travel ban imposed by the government to and from some areas in China.
“Significantly, the impact will be on the tourism sector as global travels are taking a hit because airlines [suspend] trips to and from China,” Dominguez said in a Senate hearing.
Dominguez said that during the SARS (severe acute respiratory syndrome) episode, visitor arrivals in the Philippines went down by 1.3 percent, from 1.93 million in 2002 to 1.9 million in 2003. He said arrivals rebounded quickly by 20.1 percent to 2.3 million in 2004.
Data showed that arrivals increased continuously until the H1N1 outbreak in 2009 which resulted in a slight decrease in tourism traffic.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said earlier the novel coronavirus would likely reduce Philippine economic growth this year by 0.3 percent. The interagency Development Budget Coordination Committee projected a 6.5 percent to 7.5 percent economic expansion this year.
Diokno, however, said the country’s macroeconomic fundamentals remained solid and strong to weather any potential headwinds coming from global and domestic fronts.
“The impact could be something like 0.3 percent,” Diokno said.
Diokno said the epidemic could reduce GDP growth in the first quarter by 0.2 percent and in the second quarter by 0.4 percent.
He said the imposition of travel ban to and from China would hinder the flow of tourist arrivals in the country.
Diokno said while the tourism sector would feel the impact of the epidemic scare, the export sector would not be significantly affected simply because “we are not an exporting country.”
The latest reports showed that the epidemic claimed the lives of 908 individuals in mainland China. The outbreak also caused huge disruptions in China as Communist Party rulers ordered virtual lockdowns of cities, cancelled flights, closed factories, and shut schools.