Analysts see virus’ impact on economy as minimal

By Mayvelin U. Caraballo, TMT, Manila Times, 1 Feb 2020

Amid the 2019 novel coronavirus (2019-nCoV) scare in the country, private analysts have shared the view of the government’s economic managers that the outbreak would only have a minimal impact on Philippine economic growth.

Maybank Kim Eng chief economist Suhaimi Ilias said the spread of the virus was likely only in the short term.

But he added that an important factor at present “is the constant update[s] by relevant authorities [on] the cases and the measures that have been taken to contain it.”

Robert Dan Roces, Security Bank Corp. assistant vice president and an economist, noted the incidence of 2019-nCoV in the country is well-contained “relative to the rest of the countries with infections.”

The Department of Health earlier confirmed the first case of the virus in the Philippines, involving a 38-year-old Chinese woman who tested positive for the virus.

Despite this case, Roces said the country’s tourism sector would be affected, including airline and other complementary industries.

Analysts at ANZ Research said the Philippines was “likely to experience only slightly negative effects.”

Ruben Carlo Asuncion, Union Bank of the Philippines chief economist, said tourism connected with the retail and service sectors; and trade, particularly exports, would be the two areas that will be hit by the effects of the 2019-nCoV outbreak.

“If this outbreak delivers a severe, but temporary impact, like SARS (severe acute respiratory syndrome), the economic impact on the Philippines is very likely to be very minimal,” he added.

The Difference Group founder, Dan Steinbock, said it was a challenge to quantify the economic impact of the 2019-nCov on the Philippine economy at present.

“The question is whether the government can manage this without overshooting,” he added.

Citing Chinese authorities´ draconian measures against the outbreak as an example, Steinbock said he thinks that China is doing only what it can given the situation.

The comments from the analysts were consistent with statements of Finance Secretary Carlos Dominguez 3rd and Socioeconomic Planning Secretary Ernesto Pernia on Thursday night that the virus would have a short-term effect and would not trigger recession in the country.

“I think it’s likely to just have a short-term impact because given the measures being done to minimize the Filipinos incurring the coronavirus, it shouldn’t take long for that to have an effect on the economy,” Pernia said.

Dominguez said the public should appreciate China’s response to the outbreak to shorten the potential length and spread of the virus.

“One thing we have to appreciate with the Chinese government [is]) they acted very swiftly on this round of these diseases and have been very proactive in the control of this disease. This is much better than what happened during the SARS and the MERS-CoV (Middle East respiratory syndrome-coronavirus) outbreaks,” he added.

The Finance chief said it is too early to tell the impact of the virus scare on the tourism sector, but added that “we’re not going into a recession because of this.”