Finance Secretary Carlos Dominguez III on Tuesday downplayed the impact of the 2019 novel coronavirus acute respiratory disease on economic growth this year, saying the growth target of 6.5 percent to 7.5 percent remains realistic.
Dominguez said in a Senate hearing Tuesday that while the dreaded disease “may restrain economic growth, we are standing by our target of 6.5 to 7.5 percent GDP growth projection this year.”
He said it would be “a challenge” to estimate the economic cost of the disease because it was still in its early stage.
Dominguez said the tourism sector would be “badly hit” because of the travel ban imposed by the government to and from China and its territories. China is the second largest source of tourism traffic in the Philippines.
“Significantly, the impact will be on the tourism sector as global travels are taking a hit because airlines [suspend] trips to and from China,” Dominguez said.
Dominguez recalled that amid the height of the severe acute respiratory syndrome episode, international visitor arrivals in the Philippines declined 1.3 percent in 2003 to 1.9 million. He said arrivals rebounded quickly by 20.1 percent to 2.3 million the following year.
Data showed tourist arrivals increased steadily until the H1N1 outbreak in 2009, which resulted in a slight decrease in arrivals.
“China has been the Philippine’s top trading partner. Last year, more than half of our exports to China were shipments of electronic parts. In the immediate term, the temporary closure of factories in China and possible disruption in global supply chains may cause a temporary, slight decline in our exports, particularly of electronics and auto parts,” he said.
“While these developments may dampen our growth somewhat, domestic tourism is expected to increase as more people would likely prefer to travel within our borders, thus boosting domestic consumption. With our ‘Build, Build, Build’ program firing on all cylinders this year, complemented by a benign inflation rate and stable monetary policy, we expect the economy at large to sustain its momentum,” he said.
“At this moment, it is reasonable to expect that while these developments might slightly restrain our economic expansion, these threats are not enough to force a dramatic reduction in our growth estimates. We are standing by our working projection of a GDP growth rate between 6.5 percent and 7.5 percent for 2020,” Dominguez said.
Aside from the nCoV outbreak, the government is dealing with the potential impact of the recent Taal Volcano eruption to economic growth.