The Philippines is one of the most vulnerable countries to the economic impacts of the novel coronavirus (NCOV) outbreak, a global think tank said.
A report published by the Overseas Development Institute (ODI), authored by Sherillyn Raga and Dirk Willem te Velde, examined the possible vulnerabilities and impacts in low- and middle-income countries to the effects of this outbreak. The report was posted on its website on ODI’s website on February 5.
“The outbreak of the novel coronavirus will have significant impacts on the poorest economies, even if they do not have confirmed cases,” the report, titled Economic vulnerabilities to health pandemics: which countries are most vulnerable to the impact of coronavirus, said.
“Vietnam, Sri Lanka and Philippines, followed by Kazakhstan, Cambodia, Kenya, Malaysia and Nepal, are the most vulnerable to coronavirus because they are most exposed to China and least well placed to address the impacts,” it added.
In an interview with reporters, Philippine officials said the NCOV could have an impact on government revenue as the flow of trade from China is affected by the outbreak.
Carlos Dominguez, Department of Finance (DOF) secretary, said in a press briefing at the Bureau of Customs (BOC) in Manila Friday evening while the Philippines is a very resilient economy, some sectors will be affected such as tourism and manufacturing.
“We’ll see probably a hit in some manufacturing, especially those manufacturers who export to the Wuhan area. We don’t know how much of the factories there are really closing because that will affect our sales. We might have some less imports from the Wuhan areas so that might affect our revenues too,” Dominguez said.
Rey Leonardo Guerrero, BOC commissioner, said for the month of Feburary, the celebration of Chinese New Year was expected to have an effect on collections, however, some workers in China extended their leave after the holidays due to the NCOV.
“You have to remember in February, we were experiencing the effects of Chinese New Year. So we were told that after the Chinese New Year, people in China should have reported for work already,” Guerrero said.
“But because of the NCOV, some of them had to extend their vacation for another 10 days. So because of that we received some reports from importers that they could not ship exports from China to the Philippines because of lack of manpower,” he added.
The ODI report said while the SARS virus in 2003 had a limited effect on global growth
of around 0.1 percent, or $50 billion to $100 billion, the current coronavirus is different in spread (faster), mortality rates (lower), and measures taken (more and faster).
“It is too early to tell the impact, but with China’s gross domestic product (GDP) share in 2019 (17 percent) more than four times bigger than in 2003 (4.3 percent), and the number of confirmed cases already nearly double that of the total of SARS, it seems prudent to expect a larger economic impact this time around,” the ODI publication said.
“The impact could be equivalent to one percent of Chinese GDP this year and some 0.4 percent of world GDP. The global costs could be around $360 billion. There will also be effects in the poorest countries in Asia and Africa. For example, we estimate that sub-Saharan Africa stands to lose $4 billion in export revenue, even without contracting a single case of coronavirus,” it added.
The report also pointed out some countries are affected by the coronavirus most directly in terms of an already visible direct health impact and direct flight cancellations.
“These include the Philippines and Vietnam, followed by a range of mainly Asian countries that have recorded infected cases. Some African countries are also included as they have cancelled flights,” it said.
“Meanwhile, countries most exposed to coronavirus through economic channels include Mongolia, Cambodia and Laos, followed by other, mostly Asian, countries (e.g. Myanmar, Philippines and Vietnam),” it added.
To address the impacts, the report said countries need to implement a range of health-related policies to contain the spread of the virus.
“In addition, in economic terms, China has already begun to address economic weaknesses. Other countries need to be aware of the potential fall-out, especially this quarter. Some countries are much more exposed to China than others, but most, if not all, are much more exposed than when a health pandemic struck in 2003,” it said.
The report said should Chinese demand fall by one percent due to the coronavirus outbreak, low- and middle-income countries would lose $4 billion worth of goods exports and $0.6 billion in tourism receipts.
“If oil prices fall by five percent amidst lower global demand following the outbreak, sub-Saharan African countries would face a $3 billion cut on its mineral fuel export revenues,” it said.
Meanwhile, since the Philippines was identified in the report as one of the countries most vulnerable to the NCOV in economic terms, Dominguez noted several measures that could be done to address this.
He said there is a need to maintain a vigilant stance to assure biological safety and good health of the population, and continuously monitor developments of trade and tourism.
He added the need to be ready to implement monetary and fiscal tools to counter potentially adverse economic fallout, and prepare marketing and finance programs to assist industries that may become distressed.
“With regards to the NCOV I think it’s a little too early to tell (the impact). I said this in the Senate, I think the airlines and the rest of the tourism industry are going to feel the pinch.
I don’t know how long. I don’t know if the virus has already peaked,” Dominguez said.
“The estimates I’ve seen is if it really turns out bad, we will probably see a hit of about three-tenths of one percent of our GDP growth. But again you know we’re not teetering on the edge of bankruptcy or anything, we have a very resilient economy,” he added.
