Moody's cuts PH economic growth forecast to 6.1% due to COVID-19

Moody's Investors Service has lowered its 2020 economic growth forecast for the Philippines to 6.1 percent from 6.2 percent due to the COVID-19 outbreak, citing spillovers from slower growth in the region, primarily the impact from China.

Despite the reduction, the forecast remains relatively high based on the expectation that the economic impact will be limited to the first quarter, with normalization of activity resuming in the second quarter.

The revised forecast of 6.1% for 2020 still exceeds the 5.9 percent growth achieved by the Philippines in 2019, though it falls short of the government's target of 6.5 to 7.5 percent for the year.

The Philippine economy is expected to be impacted because China is its primary trading partner and a significant source of foreign tourists.

Data indicates that approximately one-fourth of the Philippines' goods exports in 2018 were destined for China.

Furthermore, Chinese tourists constituted nearly 20 percent of total tourist arrivals, highlighting the importance of travel and tourism, which contribute almost 10 percent to the Philippines' GDP.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno has stated that the outbreak could dent economic growth in the first half by an average of 0.3 percent.