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Unprecedented economic slump in Philippines

Unprecedented economic slump in Philippines

In implementing the strictest lockdown in the region to contain the spread of Covid-19, the Philippines paid dearly in terms of economic losses. Gross domestic product (GDP), a measure of the value of local economic activities, shrank by 16.5 per cent in the second quarter compared to a year ago. This is the country’s worst economic performance in more than 40 years.

The government placed a large part of the country under enhanced community quarantine (ECQ) when local transmissions surged in March, because the priority then was the safety of the people. In an economic briefing last week, the administration’s economic managers estimated that such a decision prevented 3.5 million Covid-19 cases and prevented as many as 171,000 deaths from the disease.

However, the economic cost was severe. With 75 per cent of economic activities put to a halt by the ECQ imposed in many parts of the country like Metro Manila, millions of jobs were lost, leading to reduced economic activity by about P1.1 trillion ($22.4 billion) a month. By sector, industry and services were the most battered. In the second quarter, while agriculture recorded a 1.6-per cent year-on-year growth, industry fell by 22.9 per cent and services contracted by 15.8 per cent.

Specifically, tourism revenue losses piled up as the government barred local travel and the entry of foreigners while other countries closed their borders to prevent the spread of the disease. Remittances that in big part fuelled the economy were also affected, with tens of thousands of Filipinos overseas losing their jobs as their host countries suffered from the global recession. Manufacturing stood still as factory workers couldn’t report to work because public transportation was stopped.

Did the sweeping, draconian lockdown achieve its purpose of containing the health crisis? It seems it may have not. This is evident in the still-accelerating number of new infections over the past weeks.

Globally, Covid-19 infections are rising again since July in more than 126 countries, including those that were initially successful in containing the spread of the virus but are again experiencing new waves of transmissions.

With a vaccine still far off on the horizon, the government needs to look now more than ever at what other countries are doing to live creatively and safely with the virus.

The government’s only course of action is to find ways to save lives without killing the economy – that is, fortifying the health care system while also providing the fiscal environment conducive to businesses to continue operating. Congress needs to pass with dispatch the economic stimulus bills pending before it, particularly the Bayanihan 2 that aims, among others, to support the health care system by enhancing testing, tracing, isolation, and treatment (a critical measure to allow people to get back to work) and support public transportation, notably through service contracting and bicycle lanes, to allow more mobility and worker productivity.

Citizens have a major role, too, by taking to heart important health protocols such as physical distancing, proper wearing of face masks and shields, frequent handwashing with soap, disinfecting surroundings, staying home whenever possible, and strengthening one’s immune system.

The economic cost of Covid-19 so far has been devastating, and prospects in the near-term are stark, portending great deprivation and sacrifice especially among ordinary citizens. The country will have to summon all its strength, grit, and wits to overcome both the coronavirus spread and the unprecedented economic slump the government’s response to the pandemic has spawned.

PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK

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