THE Philippines may have been spared from the 2019 novel coronavirus (n-CoV) for now, but the economy will feel the effect of the virus that is currently causing a health scare in Asia, and even in some Western countries.
In a recent commentary, ING Bank Manila economist Nicholas Mapa said the virus may dent dollar inflows into the Philippines as tourist arrivals will likely take a hit. The constraint in dollar inflows, in turn, may weaken the peso against the dollar.
“The recent fallout from the 2019 n-CoV virus may be difficult to ascertain but one area that might take a hit will be tourism,” Mapa said.
Around 21 percent of tourist arrivals are from mainland China, second only to tourist arrivals from South Korea. Tourist arrivals mean an influx of foreign currency which will boost domestic consumption as restaurants, retail and hotels will see an increase in sales, according to the economist.
With the threat of contagion of the 2019-nCoV, travel to and from China has been curtailed.
“With no end in sight just yet for the virus, we can expect a hit on the tourism sector in the near term as the Philippines may see a drop in its second-most important market,” Mapa said.
Lower tourist arrivals as a result of the virus scare, according to the economist, will likely limit a steady and burgeoning source of foreign exchange.
“We may have to expect a smaller inflow of these ‘travel exports’ in 2020 with yet another reason for depreciation for the peso,” said Mapa.
As of this writing, there are no confirmed cases of the virus in the Philippines yet.
On Wednesday, the local currency ended the day’s trade at 50.83 to a dollar, slightly weakening from the 50.75 to a dollar the previous day. However, the peso is stronger compared to last year’s level.
In January 2019, the peso averaged 52.468 to a dollar, data from the Bangko Sentral ng Pilipinas showed.
Image credits: Nonie Reyes