MANILA, Philippines — The deadly SARS-like virus that’s threatening Asia’s tourism industry and rattling financial markets will likely have “slightly negative effects” on the Philippine economy, a global bank said Wednesday.
More than 130 people have died since the new strain of coronavirus emerged in China's Wuhan, and millions are now under an effective quarantine.
Related Stories
The virus has prompted travel restrictions in China, threatening businesses and economies that rely on the huge numbers of Chinese visitors.
In a report sent to the media, analysts at ANZ Research said the drop in economic activity in mainland China due to the virus will be felt across Asia through tourism and trade channels.
ANZ Research said a 75% decline in the number of visitors and tourists from China in three months could shave 0.11 percentage points off of annual Philippine economic growth considering that Chinese nationals account for 20.9% of total foreign arrivals in the country.
Under such an extreme scenario, Thailand and Hong Kong will likely feel the sting of the virus on the tourism front the most, ANZ Research said. On the other hand, India and Indonesia will be the least affected given tourism’s small contribution to their economies and their low exposure to Chinese visitors.
As businesses and factories in the mainland close due to internal travel restrictions amid the crisis, a 20% drop in imports from China in three months could slash Philippine economic growth by 0.08%, ANZ Research also said.
Taiwan will be hit the hardest, with a 0.47-percentage point drop in growth, followed by Vietnam at 0.44 percentage points considering their high exports to China.
“A weaker Q1 (gross domestic product) in the region is a near certainty. The production disruptions in China and the timing of the Lunar New Year this year mean that the drag on January data will be pronounced,” ANZ Research said.
“The importance of Chinese tourists in the region, and the linkages of China’s production through supply chain networks in Asia mean the drag on GDP growth will be quite apparent in the upcoming data,” it added.
Impact on financial markets to be ‘short-lived’
The outbreak carries echoes of the SARS crisis, which paralyzed regional travel and battered local economies from late 2002.
On Wednesday, Philippine shares tanked anew as investor concerns over the coronavirus outbreak from China persist. In Hong Kong, dealers returned to trading floors for the first time after the Lunar New Year break and instantly began to sell, joining a global retreat that has wiped more than a trillion dollars off valuations.
While financial and currency markets are generally quicker to react on pandemics, previous disease outbreaks, like the SARS crisis, suggest that such responses “tend to be short-lived,” ANZ Research said.
“Their magnitude depends upon factors like the severity and spread of the disease, its curability or preventability, government efforts to contain them, and the prior state of the economy,” ANZ Research explained.
As of this writing, the Philippine government has not yet recorded any confirmed cases of the new coronavirus in the country despite the presence of persons under investigation. — with reports from AFP and Franco Luna