Monday, March 2, 2020

COVID 19: Effects to the Philippines and The World Economy


Photo by Anna Shvets from Pexels

The world is in total grip towards pandemonium of Coronavirus Infectious Disease 2019 or COVID 19 (formerly Novel Coronavirus 2019). It wreak havoc in mainland China where the source of this infection believe came from in the market of the City of Wuhan, Hubei province, People's Republic of China. Although World Health Organization (WHO) officials mentioned at there is only a 2% chance of the probability for a patient afflicted with such disease die and 98% recovery rate. It still remains a threat to our borders and our national security, weakening the citizenry and stretching the nation's healthcare resources to the maximum. Our country, the Philippines is vulnerable to such pandemic effect of this new disease hitting our shores as we are very close proximity to mainland China with two related deaths of COVID-19 of whom the two casualties were Chinese citizens were reported as this writing. 


Effects on Local Tourism and Travel

Top destinations in the country such as Boracay, Palawan, Cebu, Bohol, Davao and Siargao were tremendously affected with such temporary travel restriction from our national government. There was an incident in late January to early February of this year that vacationers mostly coming from mainland China due to Lunar New Year and others coming from South Korea because of the winter season who come here to relax and enjoy our tropical weather.

In recent weeks, temporary travel restrictions were implemented, the local economies dependent on tourism like hotels, travel agencies and many more are gravely affected with the temporary cancellation of bookings for foreign tourists coming from affected countries which are the bulk of the number of arrivals particularly Chinese and South Korean citizens on a winter holiday here in the country. Although, local tourism and tourist from other non-affected countries with no restrictions can still come, visit relax and enjoy the said travel destinations.

South Korea which has become a top holiday destination among Filipinos were temporarily halted since 28th of February 2020 due to the ongoing clampdown on the spread of the illness which has exceeded 2000 cases in past few weeks.


source: tradingeconomics.com

Effects on the Global Economy and Trade


OFWs were temporarily banned to travel to Hong Kong, Macau and Taiwan which affected their livelihood and employment in this Chinese territory was recently lifted by our national government. Department of Foreign Affairs and Department of Health officials reminded them to take precaution and seek medical attention if needed on the country of their destination. Filipinos who were allowed to return to South Korea are those that have current businesses there (OFWs with current employment, Filipino students studying in South Korea and Filipinos married to South Korean citizens).

Supply chain of goods are also affected due to less or non-production of goods in the manufacturing industry. Although the Chinese government have lifted the temporary work stoppage because of the economic effect on their economy and the world due to the pandemic and the health issues resulting to transmission of the disease. China is the world's factory with majority of finished products, components of electronic equipments and many more are manufactured here. Some industry player like Samsung are planning to move their operations to Southeast Asian countries such as Vietnam and Thailand.

Effects on Philippine Real Estate

With the travel ban on some of these affected companies like travel agencies, airline companies and hotels are affected with cancellation of trips and booking were experience because of the current pandemic happening around the globe.

Office Rental Spaces have probably been affected into downsizing particularly with the POGO sector. Loss of  income could possibly be seen as an effect with lesser frontline workers coming from mainlaind China  who have not returned after the travel restriction were implemented due to this pandemic.

Residential Rental Properties seem to have simmered down due to the decline of Chinese POGO workers with the rental prices could stabilize from the artificial increase over the years because of high demand for these foreign workers. 

Conclusion

The situation of this pandemic is fluid and has changed rapidly. There were recent reports of infection in the European countries like France,Germany and Italy. There was recent news report that it already reached the African continent. It is believed the world tourism industry lost about US$ 22 Billion dollars in the COVID-19 pandemic affecting everyone with job losses at a staggering rate in the coming months with some believe that the world is coming to grips of recession but we are still hopeful that the disease is a temporary setback for us and totally disable the local and world economy would recover in the coming months.  Travel & Tourism Sector (foreign and domestic) makes up 12.7% of the country's gross domestic product.

Source(s):

COVID-19 Outbreak Expected To Impact On The Local Economy; DOH Bracing For Local Transmission | https://bit.ly/2TdcPsB
Philippines braces for impact of Covid-19 on local economy| https://bit.ly/38Ubopl
Covid-19 presents economic policymakers with a new sort of threat | https://econ.st/32jB0tk
COVID-19 to impact on Philippines growth — Capital Economics | https://bit.ly/386DEUI
COVID-19: US, European companies in China still face challenges in getting back to work | https://cnb.cx/32IQGGU

About the Writer

 CRB Benedict Baluyutt is a professional real estate broker, real estate appraiser and associate of C. F. Baluyut Realty. He is currently the Vice President for External Affairs, Real Estate Brokers Association of the Philippines, Inc. (REBAP) - Pampanga Chapter. You can get in touch with him at https://www.cfbaluyutrealty.com.






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