‘Virus outbreak to slash GDP growth by 0.3%’

Manila, Philippines — The outbreak of the 2019 novel coronavirus (nCoV) may cut the country’s gross domestic product (GDP) growth by 0.3 percentage point this year, according to the Bangko Sentral ng Pilipinas.

BSP Governor Benjamin Diokno told reporters on the sidelines of the general membership meeting of the Management Association of the Philippines (MAP) that the country’s GDP growth could be lower by 0.2 percentage point in the first quarter and by 0.4 percentage point in the second quarter.

 “Preliminary BSP estimates show a 0.3 percentage point reduction in 2020 GDP,” Diokno said.

Diokno said the Philippines could be affected in terms of tourism receipts as well as remittances from overseas Filipino workers.

Economic managers expect a GDP growth of between 6.5 and 7.5 percent this year.

In his speech, Diokno said the growing concern over the Wuhan coronavirus outbreak has weighed down on growth prospects not only in China, but globally.

He said the International Monetary Fund sees downside risks, including rising geopolitical tensions, intensifying social unrest as well as further worsening relations between the US and its trading partners.

The BSP chief said multilateral agencies including the IMF, the World Bank, and Asian Development Bank (ADB) continue to expect the Philippine economy to remain one of the fastest growing economies in 2020, not only in the region, but the world as well. 

 “After all, the positive growth story of the Philippines in the past 84 consecutive quarters was not achieved in a risk-free environment. The domestic economy’s proven ability to rise above the challenges is reflective of the kind of growth it has built — rooted in structural transformation and not in mere streak of luck,” he said.

The country’s GDP growth accelerated to 6.4 percent in the fourth quarter of last year from the revised six percent in the third quarter but was not enough to push the full year 2019 growth to hit the six to 6.5 percent target.

“I believe that the economy remains in a position of strength to weather uncertainties in the global environment. Sustained commitment to pursue the government’s infrastructure program and reform agenda is key to achieving a high, inclusive and sustainable growth,” Diokno said.

On the external front, he said major risks include a synchronized economic slowdown, rising geopolitical tensions, higher tariff barriers between the US and its trading partners, and the recent novel coronavirus outbreak that has now been assigned a “high-impact” global risk assessment by the World Health Organization.