The novel coronavirus outbreak is expected to delay the expected recovery but it is not likely to deny it entirely, especially given the expansionary policy mix, according to the latest report from ANZ Research.
Recent economic data show signs of a recovery as the government’s infrastructure programme regains steam. However, the novel coronavirus (COVID-19) outbreak in the region has emerged as a key downside risk.
Tourist arrivals from China will be negatively impacted, the magnitude of which could be larger than that during the 2003 SARS epidemic, given the surge in numbers of Chinese tourists since then.
Slower economic activity in China and other affected countries will have spill-over effects into the Philippine economy via potentially lower inward remittances and decreased import demand in China. A lower fuel import bill should counteract the downward pressure on the current account.
A hit to Q1 GDP growth looks likely, but further out, the impact on full-year growth will depend on how quickly the virus spread can be contained and how quickly infrastructure spending can be pressed into action, the report added.