COVID-19 may cost PH economy 1% of GDP

The Philippine economy could lose up to 1 percentage point from its GDP growth if the COVID-19 outbreak persists for a year, according to Socioeconomic Planning Secretary Ernesto M. Pernia.

Pernia stated that the virus outbreak could jeopardize the government's economic growth target of 6.5 to 7.5 percent.

If the virus is contained in China by June, the impact on Philippine GDP growth is estimated at a 0.3 percentage point reduction.

However, if COVID-19 continues to affect tourism, trade, and manufacturing until the end of 2020, the economy could lose 1 percentage point from its 2019 GDP growth.

The Philippines' heavy reliance on China for imported raw materials and intermediate products makes it particularly vulnerable.

China was the Philippines' top trading partner in 2019, serving as the largest source of imports and the third-largest export market.

Pernia suggested that increased government spending on public goods and services could help protect the domestic economy from the adverse effects of COVID-19.

Initial estimates indicate that the budget deficit might widen to 3.3-3.5 percent of GDP this year, potentially exceeding the set ceiling of 3.2 percent of GDP.