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COVID-19 to impact on Philippines growth — Capital Economics


 COVID-19 to impact on Philippines growth — Capital Economics Czeriza Valencia

(The Philippine Star) - February 27, 2020 - 12:00am MANILA, Philippines — Despite
being relatively insulated from the effects of the coronavirus disease 2019,
(COVID-19), the Philippines will likely see slower economic growth in the first
quarter of the year primarily due to the virus’ impact on tourism, London-based
think tank Capital Economics said. In a new research brief titled “Assessing the
impact so far,” the macroeconomy research firm said the Bangko Sentral ng PIlipinas
(BSP) is expected to cut key rates further this year after inflation reached an
eight-month high of 2.9 percent in January. “The coronavirus outbreak will weigh on
growth this quarter. The Philippines is more insulated than most in the region, but
its tourism sector will be hit hard. Arrivals from China had been growing strongly
before the virus,” the report said. The BSP slashed its main policy rate to 3.75
percent early this month as a preemptive measure in response to external headwinds
that include the global contagion. “We think another cut is likely over the coming
months,” Capital Economics said. To curb the spread of the novel coronavirus into
the country, the Philippines imposed early this month a ban on travellers coming
from China and its special administrative regions Hong Kong and Macau. A ban on
travelers from a hard-hit South Korean province is now also in effect. The domestic
economy picked up by 6.4 percent in the fourth quarter of 2019 from a downwardly
revised six percent in the third quarter of 2019. Preliminary estimates of the
National Economic and Development Authority (NEDA) made earlier this month showed
that if the coronavirus contagion persists for one month at the current pace, 0.06
percentage point of the GDP will be impacted. If the contagion extends up to five
months from now, 0.3 percentage point of the GDP will be affected. If the present
level of contagion lingers on for 11 months, however, as much as 0.7 percent age
point of the country’s economic output will be affected. These estimates were
arrived at assuming a 100 percent reduction on the number of tourists coming from
China and a 10 percent reduction on the number of tourists coming from other
countries. A full reduction of inbound tourism from China shaves off a quarter of
the P450 billion spending of foreign tourists in the country that makes up five
percent of GDP. NEDA officials have recognized that the travel and tourism industry
will take a beating in the current environment, standing to lose P22.7 billion per
month including domestic airline receipts. Travel and tourism – both foreign and
domestic – makes up 12.7 percent of the country’s gross domestic product (GDP).
China and South Korea, which are the worst hit by the contagion, are the two top
sources of tourists to the country.

JP Morgan economists warn of "catastrophic outcomes" of human-caused climate crisis

Climate campaigners on Friday expressed hope that policymakers who are stalling on
taking decisive climate action would reconsider their stance in light of new
warnings from an unlikely source: two economists at J.P. Morgan Chase. Extinction
Rebellion spokesperson Rupert Read revealed Thursday that he had obtained a report,
entitled "Risky Business: Climate and the Macroeconomy," by J.P. Morgan economists
David Mackie and Jessica Murray. The report issued warnings to bank clients similar
to those promoted by climate action groups — describing extreme weather events and
global conditions that could result from the continued extraction of fossil fuels.
In doing so, the economists implicated the bank's own investment activities in the
potentially catastrophic effects of the climate crisis. J.P. Morgan is the
world's largest financial backer of fossil fuel companies, helping to fund
fracking, pipeline projects, and Arctic oil and gas exploration. The company
has contributed $75 billion to such projects since the Paris climate agreement was
forged in 2015. The agreement called on governments to reduce fossil fuel emissions
to help limit global heating to 1.5° Celsius above pre-industrial temperatures. If
activities like the ones funded by J.P. Morgan continue to release fossil fuels
into the atmosphere, Murray and Mackie wrote, "We cannot rule out catastrophic
outcomes where human life as we know it is threatened." Advertisement: Failing to
move away from global systems that scientists agree are causing the planet to warm
"would likely push the Earth to a place that we haven't seen for many millions of
years," they added. On Twitter, Read pointed out the incongruity of such "radical
truth-telling" coming from J.P. Morgan. Others highlighted the report as one that
might catch the attention of others in the financial services industry and people
who believe bold climate action is a cause embraced by a minority of extremists.
"Hardly a bank you could call communist now, is it?" tweeted journalist Dom
Phillips. Citing reports by the International Monetary Fund (IMF) and the
Intergovernmental Panel on Climate Change (IPCC), the authors note that with the
status quo kept in place, the planet is expected to reach a temperature 3.5° above
pre-industrial levels. In addition to major impacts on the world economy, the
authors wrote, the climate crisis will affect human health, water supplies, and
migration. The report comes just weeks after CNBC host Jim Cramer announced fossil
fuel investments are "in the death knell phase" and that "the world's turned on"
the industry as it did on tobacco as understanding grew about the risks of smoking.
"It is clear that the Earth is on an unsustainable trajectory," reads the report.
"Something will have to change at some point if the human race is going to
survive." The authors advocated for a global carbon tax but said, "This is not
going to happen anytime soon" and called the continued investment in climate-
warming fossil fuels a global problem with "no global solution...in sight." Bill
McKibben, co-founder of 350.org, suggested that as one solution, the economists
"might want to talk with the Chase bankers who are guaranteeing [climate
catastrophe] will happen by lending oil companies endless cash." Activist Becky
Brunton said the report offers the latest evidence that those with the power to
stop supporting fossil fuel projects are fully aware of the damage their
investments are doing to the planet. "They know. They ALL know," tweeted Brunton.
"But the now (profits) outweighs the future (earth)."