The International Monetary Fund (IMF) expects the novel coronavirus outbreak to have a negative impact on the economy, specifically on the tourism and trade sectors.
“The coronavirus, as you know, has caused a lot of anxieties and restrictions on travel. The Philippine economy is not immune to that. I think about the major sector that comes to my mind would be tourism. The other impact would be on the global value chain,” said Yongzheng Yang, IMF resident representative.
But Yan said they have maintained their full-year GDP forecast of 6.3 percent and they expect the growth for the first quarter to be around that range.
Yang explained with China as one of the largest sources of tourism for the Philippines, “that is going to be negatively affected and will certainly have negative impact on the economy.”
According to the latest data released by the Department of Tourism (DOT), from the total 684,063 inbound travelers in November, tourists from China reached 126,785 , a 30.02 percent rise compared to the previous year.
China is the country’s second biggest source of international visitors.
South Korea remains the country’s top source market with 176,185 visitors, 37.71 percent increase from last year’s 127,935 arrivals for November.
The US remained as the third biggest source of visitors while Japan placed fourth.
The Taiwanese market posted 53,784 arrivals for November, a marked 40.76 percent growth from the previous year.
Since the start of February after officials confirmed the Philippines’ first case of coronavirus , local carriers have temporarily cancelled flights to and from China.
China was last year’s second largest export market with $9.628 billion, 13.7 percent share; and the largest source of imports at $24.536 billion, 22.9 percent share.
As far as economic policies are concerned, Yang said the Monetary Board’s decision last week to reduce the key rates of the Bangko Sentral ng Pilipinas (BSP) by 25 basis points “is a good response.”
“Macroeconomic policy has a role to play. If the impact would be larger, there can be further consideration of responses. There’s a lot of uncertainty going on and this situation will be watched very closely to see how the world responds,” Yang said.
“We need to monitor this development and be ready to take necessary actions to support the economy and support the industry that might be affected by the outbreak,” Yang added.
The IMF on Monday provided a positive assessment of the Philippines following the 2019 Article IV Consultation Staff Report. The assessment is based under Article IV of the IMF’s Articles of Agreement where IMF holds bilateral discussions with members, collects economic and financial information, and discusses with officials the country’s economic development and policies.
“I believe the IMF’s assessment of the domestic economy reflects multi-sectoral efforts to foster inclusive economic growth. In line with this, the BSP will continue promoting price stability, financial stability, and an efficient payment and settlement system while pursuing legislative initiatives that will enhance our capacity to pursue our mandates,” said BSP Governor Benjamin Diokno.
The report said despite the slowdown in the first half of 2019 due to temporary government underspending and external trade uncertainty, the Philippine economy continues to perform well, having regained momentum in the second half of the year.
The report noted that inflation continued to decline to settle at 2.5 percent in December 2019. Bank lending growth slowed down but stabilized at 10.5 percent in September 2019 or as of the end of the IMF mission.
Meanwhile, gross international reserves reached $88 billion as of end-2019, which is 200 percent of the IMF’s reserve adequacy metric.
“The IMF outlook on the country is positive. The Philippine economy continues to be a strong performer despite recent headwinds,” the IMF Report said.
