Pernia: COVID-19 to slash 1 percentage point to GDP; over 30k job losses seen

The problem posed by the coronavirus disease 2019 (COVID-19) is seen to shave off as much as one percentage point in the country’s economic output and render more than 30,000 workers jobless amid the slowdown in tourism and trade, the country’s chief economist said Tuesday.

“In terms of economic growth, the corresponding impact would be 0.5 to 1 percentage point shaved off from our target of 6.5% to 7.5% of real GDP (gross domestic product) growth in 2020,” Socioeconomic Planning Secretary Ernesto Pernia said at a press conference after the Economic Development Cluster meeting in Manila.

“This is assuming that the COVID-19-induced disruption will last until the end of June this year,” Pernia said.

Tourism and travel as well trade sectors are the industries that are directly hit by the virus spread.

The COVID-19 is also seen to result in foregone value added or potential output loss of P93 billion to P187 billion, “which is equivalent to 0.4% to 0.9 percent of GDP.”

“With the slowdown of economic activities, there would a concomitant reduction in employment of around 30,000 to 60,000 jobs in the travel and tourism sector,” Pernia said.

Monthly headline inflation is also expected to increase by 0.1 to 0.2 percentage point “given the supply disruption in the arrival of China-dependent food imports,” he added.

The estimated decline in economic output is seen to widen the national government’s budget deficit to as much as 3.6% of GDP, higher than the administration’s budget gap ceiling of 3% of GDP.

To mitigate the impact on unemployment, Labor Assistant Secretary Dominique Tutay said the Department of Labor and Employment has financial assistance and livelihood programs as well as jobs placement initiatives to ensure that displaced workers will be reintegrated to the labor force.

Pernia said the government will implement COVID-19 Mitigating measures are in three phases.

“The Phase 1: The response focuses on public health measures to minimize the duration and contain the spread of the virus,” he said.

In Phase 2, the Duterte adminstration will seek to rebuild confidence in the economy once its safe for people to resume normal activities by vigorously promoting domestic travel, and tourism.

“Travel can be encouraged by abolition of travel tax,” Pernia said.

“Phase 3 ensures the country is better prepared for the next epidemic or pandemic thru strategic investments in the medical field,” he added. — RSJ, GMA News