Impact of COVID-19 on Philippine tourism, economy

One of the most visible impacts of COVID-19 is seen in the tourism industry. What will be the extent of losses caused by COVID-19 to the Philippine tourism industry and to the national economy?

As a background, the Department of Tourism announced last month that the Philippines breached its 2019 international arrivals target of 8.2 million with 8.26 million foreign visitor arrivals recorded last year.

The DOT said that the record-breaking foreign tourist arrival was a 15.24-percent increase from 2018’s 7.16 million international arrivals. The report added that except for January, there was double-digit growth in most months of the year with the largest growth rate recorded at 27.54 percent in August.

Top tourists

South Koreans are still the top tourists of the country with a total of 1.98 million arrivals or a 22.48 percent growth. They have been holding the spot since 2010.

China was the second top source market with 1.74 million visitors or a 38.58-percent increase while the United States of America comes third with 1.06 million arrivals or 2.90 percent increase.

In fourth and fifth places were Japan and Taiwan with 682,788 and 327,273 in total number of arrivals. The two countries posted an increase of 8.07 percent and 35.01 percent, respectively last year.

The seven that made up the rest of the top 12 visitors markets in the country included Australia (286,170 arrivals), Canada (238,850), United Kingdom (209,206), Singapore (158,595), Malaysia (139,882), India (134,963), and Germany (103,756).

The DOT launched its refreshed “It’s More Fun in the Philippines” tourism campaign slogan in February last year. The same slogan was used by the previous administration. In using the same slogan, the new administration repurposed it to advocate for sustainable tourism.

Two days ago, the National Economic and Development Authority said that if tourist arrivals would continue to dwindle until June amid COVID-19 situation, the total number of visitors to the country might drop by 1.42 million, resulting in billions of pesos in losses in the tourism industry. 

COVID-19, GVA, GDP

Underscoring that Chinese visitors account for 22 percent of tourist arrivals in the Philippines, NEDA Undersecretary Rosemarie Edillon said that the tourism sector might forego P93 billion to P187 billion in gross value added (GVA) to the national economy with about 30,000 to 50,000 jobs could be lost in the process.

Compared to the initial target growth of 6.5 percent to 7.5 percent this year, Edillon further said GDP) growth might also be limited in the range of 5.5 percent to 6.5 percent due to situation caused by COVID-19.

The sum of the GVA from all the productive sectors in the economy makes up the Gross Domestic Product of the country. Measuring the GDP using the GVA approach eliminates double counting of intermediate inputs used in the process of production or provision of services in every sector of the economy.

TDGVA

The Philippine Statistics Authority (PSA) said that as measured by the share of Tourism Direct Gross Value Added (TDGVA) to the Gross Domestic Product (GDP), the contribution of tourism industries to the Philippine economy was estimated at 12.7 percent in 2018. 

The TDGVA amounted to P2.2 trillion in 2018, higher by 14.3 percent compared to previous year’s record of 1.9 trillion pesos.

The TDGVA estimate is based on the latest results of the Philippine Tourism Satellite Accounts (PTSA), which provides information on tourism expenditure and employment in 2018.

From the PTSA the following results are also presented:

• Inbound tourism expenditure, which refers to the expenditure of non-resident visitors (foreign visitors and Filipinos permanently residing abroad) within the Philippines, declined by 1.6 percent in 2018, amounting to PhP 441.4 billion from PhP 448.6 billion in 2017.
• Compared to the country’s total exports, the share of inbound tourism expenditure was 8.0 percent. Inbound tourism ranked third among the biggest export items in 2018, after miscellaneous services at 31.5 percent and semiconductors at 22.8 percent.
• Domestic tourism expenditure, which includes expenditure of resident visitors within the country either as domestic trip or part of an international trip, grew by 21.0 percent, from PhP 2.6 trillion in 2017 to PhP3.2 trillion in 2018. Domestic tourism expenditure represents 24.9 percent of the household final consumption expenditure (HFCE) in 2018.
• Employment in tourism characteristic industries was estimated at 5.4 million in 2018, higher by 1.8 percent compared to 5.3 million in the previous year. Share of employment in tourism industries to total employment in the country was recorded at 13.0 percent in 2018./dbs