Pernia downplays nCoV impact on growth target

by Czeriza Valencia (The Philippine Star), 5 Feb 2020

MANILA, Philippines — Despite its immediate impact on tourism and travel, the spread of the novel coronavirus in the country is not expected to slowdown economic growth this year as domestic consumption is still expected to be robust alongside government spending, the country’s chief economist said.

Interviewed on “The Chiefs” current affairs program on One News Monday night, Socioeconomic Planning Secretary Ernesto Pernia said the slower influx of foreign tourists, particularly Chinese tourists, will directly hit 3.5 percent of the country’s gross domestic product (GDP) that is powered by tourism and travel.

“The immediate impact is on tourism. Chinese tourism will be cut short, we don’t know how long,” he said.

There were 1.6 million Chinese tourists who visited the Philippines from January to November 2019, higher by 40.20 percent than the 1.16 million arrivals in 2018. They are the second biggest group of foreign visitors next to Korean tourists.

He noted, however, that remittances, which fuel consumption, can still be expected to remain to have a larger share at 12 percent of the country’s GDP.

“We are not expecting a growth lower than 6.5 percent (for this year),” he said. “Consumption spending accounts for 68 percent of GDP and government spending 15 up to 20 percent, and private sector spending 27 percent. we have other bigger contributors to GDP.”

In a briefing last Thursday, Pernia also noted that as fewer Filipinos travel out of the country and fewer foreign tourists come in for fear of contracting the virus, the travel and tourism industry may find ways to drive domestic tourism.

He also noted that other than boosting domestic travel, consumption of healthcare and sanitation products may also be given a lift.

“Internal travel within the Philippines will probably pick up because of the problem of going abroad and also the business of selling masks, soap and water will also go up,” Pernia said last week.

Pernia noted, however, that the government is keeping a close watch in slowing economic activity in China, the epicenter of the nCoV infection as it is a major trade partner.

“But aside from China, we have other foreign partners,” he said.

The government projects the domestic economy to grow at a pace of between 6.5 percent up to 7.5 percent this year throughout 2022.

The economy grew by 5.9 percent last year, the slowest in eight years, dragged down by the budget impasse that led to delays in the implementation of government programs and projects in the first half of 2019.