THE Philippines could lose as much as $300 million worth of exports, mostly in communication equipment, due to the coronavirus outbreak, but it is the least to take damage from the crisis among Southeast Asian nations, according to a United Nations report.
The country’s exports are estimated to fall by roughly $300.4 million due to the spread of the coronavirus based on an analysis of the United Nations Conference on Trade and Development (Unctad). The Philippines will likely endure significant damage in the production and shipment of communication equipment, office machinery and electrical machinery.
Exports of communication equipment could go down by $115 million, the Unctad projected, on disruption in the global value chains caused by factory closures in China, where the respiratory illness was first detected.
Further, shipments of office machinery are seen to drop by $76.8 million, while those of electrical machinery are anticipated to slide by $41.8 million. The Unctad also projected Philippine exports of auto parts and varis machinery to decrease by $22 million and $16.9 million, respectively.
Export losses in precision instruments could decline, too, by $16.6 million, and damage is to be expected as well in chemicals, metals, leather goods, rubber and plastics, wood products and furniture, textiles and apparel, and paper products and publishing, although they will be in the single-digit level, the Unctad estimated.
This impact is relatively modest for Trade Secretary Ramon M. Lopez, as it can be offset by the seemingly inevitable relocation of some manufacturers from China.
Alternative site
He bared that the government’s strategy is to now market the Philippines as a relocation site for these fleeing firms.
“Companies are quick to cope,” Lopez told the BusinessMirror. “One important direction that companies would be focusing on would be the diversification of their supply chain. As this is happening, opportunities are also emerging, as local and foreign companies now look at [the] Philippines as an important viable alternative location.”
When pitted against its Southeast Asian rivals, the Philippines is the least to accumulate export losses from the coronavirus outbreak. As such, Lopez argued this is the perfect opportunity for the country to benefit from the situation and lure the affected investors.
“With minimal impact on our manufacturing, we intensify efforts to attract companies to now consider the country as another source of their inputs,” Lopez said.
Asean damage
In Southeast Asia, Vietnam is expected to take the most damage in terms of exports, by $2.29 billion. Based on Unctad estimates, triple-digit reductions in value are anticipated in Vietnam’s shipment of communication equipment ($880.7 million), leather products ($368.2 million) and various machinery ($324.6 million).
Singapore comes second with a projected $2.16 billion in export losses, as it is seen to suffer a decline of $1.02 billion in communication equipment—the highest globally.
Moreover, Malaysia, Thailand and Indonesia follow lead with the Unctad reporting $1.07 billion, $733 million and $311.7 worth of export damage for these countries, respectively. Among all economies outside of China, the European Union is likely to take the worst hit from the disruption in global value chain caused by the coronavirus outbreak at $15.59 billion.
Even if the business impact of the infection is mostly felt in China, the Unctad concluded that it will also affect firms outside of the country’s borders, as many multinationals buy their supplies and raw materials from Chinese manufacturers.
“European, American and East Asian regional value chains will be disrupted,” the Unctad said. “The estimated global effects are subject to change depending on the containment of the virus and/or changes in the sources of supply.”
The coronavirus disease, now known as COVID-19, was first detected in Wuhan in the province of Hubei in China last year. There are 95,425 confirmed cases of the coronavirus worldwide, of which 3,286 resulted in deaths, as of Thursday afternoon. Most of the infections are located in mainland China, while there are now thousands of cases in South Korea, Italy and Iran.
Image credits: Qilai Shen/Bloomberg