RP GROWTH RATE TRIMMED BY SARSMakati City, May 21, 2003 -- The Philippines expects the SARS outbreak to shave around 0.2 percentage point off the projected economic growth of between 4.2% and 5.2% this year, a government report said Tuesday. The report, which was seen by journalists, was prepared by the National Economic and Development Authority (NEDA) and presented to a visiting International Monetary Fund team. "The main risk to growth in 2003 is the impact of SARS on tourism and consumer related sectors, such as the airline industry, hotels and restaurants, and retail trade," NEDA said. A team from the IMF has been in the country since May 8 to conduct a semiannual post-program review of the Philippine economy and its fiscal performance. NEDA's estimate of the SARS impact on the local economy assumes a 20% reduction in travel receipts. Tourist arrivals already fell 25% on year in April after declining 9.9% on year in March. The estimate also takes into consideration the foregone remittance inflows from those Filipino workers that were prevented by the government from going to Hong Kong because of the severe SARS outbreak there. The NEDA expects the partial ban on the deployment of workers to Hong Kong to translate to $116.2 million in lost remittance inflows. However, the agency expects the deployment of some 10,000 workers to Iraq to take part in reconstruction efforts to partially offset those losses. "The total loss on remittances [to December] will be $84.7 million or P4.5 billion in nominal terms. This is only roughly 0.0016% of consumer spending," the paper said. Aside from the direct impact on the airlines, hotels and restaurants, and retail sectors, the government is assuming a slowdown in exports to Hong Kong and other countries that are similarly affected by SARS The Asian Development Bank estimates growth for Southeast Asia, for which the ADB lists Indonesia, Malaysia, the Philippines, Singapore and Thailand, will decline by an average 0.5 percentage point to an annual rate of 3.4%. Prior to the SARS outbreak, the ADB was projecting growth of 4% for the Philippines. The ADB said SARS will shave 0.3 percentage point off Philippine growth if it lasts for one quarter and as much as 0.8 percentage point if SARS lasts two quarters.
Reported by: Sol Jose Vanzi
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