BSP: China virus to cut GDP growth by 0.3%

THE 2019 novel coronavirus acute respiratory disease (2019-nCoV ARD) could drag the country’s gross domestic product ( GDP) growth by 0.3 percent this year, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said on Thursday.

“Preliminary BSP estimates show a 0.3 ppt (percentage point) reduction in 2020 GDP…” Diokno told reporters in a message.

This comes after the Bangko Sentral chief said on the sidelines of the Management Association of the Philippines’ ( MAP) general membership meeting in Taguig City that the central bank determined that the 2019- nCoV would only affect economic growth in the first half of the year.

According to him, estimates show a reduction of 0.2 ppt in first quarter GDP and 0.4 ppt in the second, or an average of 0.3 ppt for full-2020 growth.

The government aims to hit GDP of 6.5 to 7.5 percent this year.

Diokno said the 2019- nCoV impact would likely hit the tourism sector and the deployment of overseas Filipino workers.

In his speech at the MAP meeting, he cited the virus, as well as a synchronized economic slowdown, rising geopolitical tensions, and higher tariff barriers between the United States and its trading partners, as the major external risks to Philippine economic growth this year.

“Nonetheless, amid these risks and challenges, I am confident that the Philippine economy will remain one of the bright spots in the region and we expect it to remain so with the support of critical structural reforms,” the BSP governor said.

Diokno’s statement echoed Finance Secretary Carlos Dominguez 3rd’s recent warning that the virus would likely drag growth in the tourism and export sectors this year.

“A significant impact on the economy [ would] most likely be centered on the tourism sector,” he told a Senate hearing on Tuesday.

Latest data from the Department of Tourism (DoT) showed that the number of foreign tourists in the country reached 7.48 million in the first 11 months of 2019, up 15.58 percent from the year-ago figure. Tourists from mainland China were the second-highest in the period, with 1.62 million.

The Finance chief also said the lockdown imposed by Beijing on the city of Wuhan in Hubei province — considered a hub of transport and industry in central China, and where the virus originated — could create some supply- chain problems that would affect trade elsewhere.

Since China is the Philippines’ top trading partner, he said this would have an effect on Manila’s outbound shipments.

Dominguez’s view was shared by a number of analysts, who estimated that the virus’ impact on the local economy would reach between $300 million and $600 million.