The economics of COVID-19
It has been 26 days since the World Health Organization (WHO) declared coronavirus, now known as COVID-19, as a global health emergency. At that time, China was only reported to have over 200 deaths with almost 10,000 cases. Now there are as 80,238 cases in 34 countries and 2,700 deaths according to the latest WHO report.
While the number of new daily cases in China is falling, the number of new cases in other parts of the world is rising. South Korea is the worst hit. As of yesterday, the Korea Center for Disease Control and Prevention (KCDC) confirmed 10 deaths with 144 new infections, taking the tally to 977 cases, the largest national total anywhere outside China, where the virus first emerged.
After South Korea the next most stricken country by COVD-19 are Italy and Iran, with the former reporting 227 sickened individuals and 6 dead, and the latter, with 61 cases and 12 deaths.
In the U.S., there are now 53 cases, due mainly to an uptick in positive tests among those individuals who were repatriated from the Diamond Princes cruise ship in Yokohama, Japan.
Kuwait is the latest to report with COVID-19 infection now totaling eight cases.
To prevent further escalation of COVID-19, many countries have curtailed flights with China and other highly infected countries with the latest announcement coming from Kuwait suspending all flights to and from South Korea, Thailand, Italy, Iraq, and Iran in addition to mainland China.
The Directorate General of Civil Aviation of Kuwait said the decision was taken upon recommendation from the Ministry of Health following the confirmation of several COVID-19 infections in the three countries.
The Philippines suspended all flights from China and Taiwan, with the latter being included for supposedly being officially declared part of China by the Chinese government. Complaints by many Filipinos working in Taiwan and the fact that not many cases of infection were reported on that island prompted the Philippine government to reverse its decision with respect to Taiwan.
Before WHO declared COVID-19 as a global emergency the IMF and WB projected an uptick in global economic growth in 2020 from the disappointing performance in 2019 as a result of the US-China trade war and other disruptions. With COVID-19, many keen observers of the global economy predict a slowdown instead, with recession not far from their minds to come in many countries with strong global economic linkages through foreign trade and investments.
Within China, much of its production activities have slowed down or curtailed. This makes it more threatening to the global economy given the extensive reach of China’s inbound and outbound trade as the workshop of the world and main source of the global supply chain.
When China’s economy slows, global economic growth naturally follows, especially in conjunction with the stoppage of China’s nationals in travelling around the world. China alone sends about 150 million people annually around the world for business and leisure trips.
Unlike our close and more progressive neighbors in the ASEAN and Northeast Asia, the Philippines is not strongly connected globally in terms of foreign trade and investment but it does depend so much on foreign remittances, which in the net accounts for almost 20 percent of our gross domestic product.
This is not to mention travel and tourism from where the World Travel and Tourism Council (WTTC) has reported that the Philippines depend directly and indirectly for about 10 percent of its GDP and 20 percent of employment. What makes curtailing flights from China and South Korea more hurting to the Philippines is that about half of the foreign tourist arrivals in the country come from South Korea and China alone.
Last year the Philippines received 8.26 million foreign tourists, with South Korea sending to us 1.98 million and China 1.74 million. The next largest number of tourist arrivals in the country after South Korea and China came from the U.S, with 1.06 million, Japan with 683 thousands and Taiwan with 327 thousands.
For now, let us cross our fingers and hope that a proven cure for COVID-19 will finally be found soon to put all our minds to rest.
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