Philippine economy takes the blunt from COVID-19
The Philippines may suffer economic losses between PHP 276.3 billion and PHP 2.5 trillion due to the coronavirus pandemic, a study of state think tank Philippine Institute for Development Studies (PIDS) titled “Projected Disease Transmission, Health System Requirements, and Macroeconomic Impacts of the Coronavirus Disease 2019 (COVID-19) in the Philippines” revealed.
The most hit sectors include manufacturing (PHP 82.1 to PHP 855.2 billion), wholesale and retail trade (PHP 93.2 to PHP 724.8 billion), transport, storage, and communication because of expected declines in tourism (PHP 11.7 to PHP 124.3 billion), and other services (PHP 41.5 to PHP 356.9 billion).
According to the study, “projections from combined disease transmission, micro-simulation and macroeconomic models suggest that the country's gross value added may decline between PHP 123.5 billion to PHP 2.5 trillion.”
It also noted that extending the Luzon-wide enhanced community quarantine (ECQ) for another month “may potentially cost the Philippine economy at least PHP 150 billion due to the possible declines in household consumption as workers remain unemployed” during this period.
Based on the distribution of household incomes in 2015, “about three (3) in every five (5) Filipinos have limited capacity to subsist without additional support if community quarantines are extended beyond one month.”
The contraction of economies as a result of the pandemic will also limit the capacity of overseas Filipino workers to send remittances to their families.
The COVID-19 outbreak has already caused a significant decline in the price of crude oil in the first quarter of 2020 as countries began to impose extreme measures (i.e., lockdowns and cross-border closures) to stop the spread of the disease.
Similarly, the stock market has been dwindling, which is considered as an indication of a diminishing market confidence. The study cautioned that “if this current trend continues, it may directly impact the country’s prospects for export growth in the near term.”
It also warned of the negative effects of disruptions in both local and global supply chains, particularly “in the delivery of final goods for consumption and the production of other goods and services that rely on intermediate inputs”.
As one of its recommendations, the study urged the government to undertake a “gradual and calibrated transition to a risk-based strategy that combines relaxation of economic restriction while controlling the spread of the virus”.
Specifically, it enjoined the deployment of a massive safety net program to ensure that households have access to food and other basic necessities, adding that “interventions must not only be confined to the poor, displaced workers and other at-risk population but also to firms, particularly micro-, small- and medium-sized enterprises.”
The study also recommended promoting economic activity while strictly implementing safety protocols. One of the proposals is to tap businesses in the government’s intervention efforts against COVID-19 (e.g., garments factories to produce PPEs, distilleries to alcohol production, etc.). It added that “other businesses may need to be developed (e.g., research, digital platform deliveries, manufacturing, etc.) to supply goods and services that cannot be readily sourced from the international market.
The public transportation must also be allowed to operate partially to facilitate the movement of essential economic transactions. However, commuters must strictly follow the guidelines on social distancing. The study said that the government may “opt to directly hire drivers or operators in a cash-for-work program to effectively control public transportation”.
Public officials are also called on to “ensure the continuous and unencumbered flow of goods and services” during this crucial period. They are urged to protect and provide enough supplies to the country’s frontline health workers, and strictly implement safety protocols to ensure that COVID-19 does not spread throughout the supply chain.
The study was conducted by PIDS Senior Research Fellow Michael R.M. Abrigo, Research Specialist Jhanna Uy, Research Fellow Valerie Gilbert Ulep, and PIDS consultants Nel Jason Haw and Kris Francisco-Abrigo. ###
MRT 7 construction taking a backseat with the government's Enhanced Community Quarantine. (Melo Acuna Photo)