The outbreak of the COVID-19 is expected to impact the Philippine economy’s growth rate in the first quarter as, among others, travel limitations adversely affect the tourism sector.
Capital Economics said in its latest Emerging Asia Chart Book report released February 25 the “coronavirus outbreak will weigh on growth this quarter.”
“The Philippines is more insulated than most in the region, but its tourism sector will be hit hard,” the report, titled Assessing the impact so far, said.
“Arrivals from China had been growing strongly before the virus hit,” it added.
The Philippine government has implemented a travel ban in China, while partial travel bans are in place for Hong Kong and Macau.
Previously, a travel ban was also issued for Taiwan but it was eventually lifted.
Malacanang meanwhile announced yesterday that a travel ban will be implemented for Philippine tourists heading to South Korea, while travelers from North Gyeongsang province will not be allowed to enter the country.
For this year, the interagency Development Budget Coordination Committee’s growth projection for the Philippine economy is 6.5 to 7.5 percent.
In the first quarter of 2019, the economy grew by 5.6 percent, as growth was then dampened by the delayed passage of the 2019 General Appropriations Act.
The Capital Economics report also mentioned that the Bangko Sentral ng Pilipinas (BSP) slashed its main policy rate to 3.75 percent on February 6, partly in response to the virus.
“The BSP described the cut as a “pre-emptive” measure to “ward off potential spill overs associated with external headwinds”. We think another cut is likely over the coming months,” the report said.
“On the financial markets front, the equity market has continued to underperform the rest of the region so far this year, even though the economy is less exposed to the coronavirus than most,” it added.
