By Ben O. de Vera, July 9, 2020; Philippine Daily Inquirer
Manila, Philippines — The Philippine economy could shed as much as $38.1 billion (almost P1.9 trillion) or 11.5 percent of gross domestic product (GDP) if COVID-19 quarantine restrictions dragged on for six months, the latest Asian Development Bank (ADB) estimates showed.
The Manila-based multilateral lender’s updated COVID-19 economic impact assessment as of June showed that under a shorter containment of three months, losses would reach $25.6 billion (nearly P1.3 trillion), equivalent to 7.7 percent of GDP.
Earlier estimates of the state planning agency National Economic and Development Authority (NEDA) showed that the economy shed P1.1 trillion or 5.6 percent of GDP across the agriculture, industry, and services sectors during the first 45 days of the enhanced community quarantine (ECQ) imposed since mid-March—said to be one of the most stringent COVID-19 lockdowns in the region.
ADB’s average stringency index showed the Philippines scored 92.9, only next to Nepal’s 95.2 among 24 Asia-Pacific countries.
As such, average mobility in the Philippines during the lockdown dropped 63.2 percent, only exceeded by the 66.4-percent decline in Sri Lanka.
While parts of the country remained in various stages of quarantine depending on the number of COVID-19 infections per locality, the government had been gradually easing restrictions, with 75 percent of economic activities allowed to resume last month.
ADB estimates showed that the agriculture, mining, and quarrying sector stood to lose between $2.5 billion and $3.7 billion during three- and six-month containment, respectively; business, trade, personal, and public services, $10.9-16.3 billion; light/heavy manufacturing, utilities, and construction, $8.4-12.6 billion; hotel and restaurants and other personal services, $2.4-3.6 billion; and transport services, $1.3-1.9 billion.
In terms of channels, losses due to COVID-19-related global spillovers to the domestic economy were estimated at between $3.9 billion and $5.9 billion or 1.2-1.8 percent of GDP during shorter and longer containment, respectively; losses from international tourism demand decline, $4.3-6.3 billion or 1.3-1.9 percent of GDP; and from domestic demand decline, $17.3-25.9 billion or 5.2-7.8 percent of GDP.
During COVID-19 lockdown, consumption shocks or percentage decline in consumption growth were estimated to range between 6.2 percent and 9.3 percent during three- and six-month containment, respectively; investment shocks or decline in investment growth at 13.3-19.9 percent; and decline in tourism receipts at 1.6-2.4 percent of GDP.
The economic team had been pushing to gradually open up the economy from quarantine while keeping minimum health standards in place to allow recovery of livelihood lost at the height of the lockdown.
“While the people’s health and safety remain a priority, we cannot keep on retreating from the virus at the cost of our livelihoods. Metro Manila and Calabarzon account for 67 percent of the country’s economy. It is vital that these regions reopen. The reality is that this virus will not go away until a vaccine is found. In the meantime, we must get back to work while staying safe,” Finance Secretary Carlos G. Dominguez III said last Wednesday.
“We need to strike a reasonable balance between safeguarding public health and restarting our economy. Health and livelihood is not a binary choice. We must protect lives in ways that do not prevent us from earning a living. This is a tough decision to make but we need to do this,” Dominguez added.
“Revving up the economy essentially means raising consumer and investor confidence, which requires some functional level of interaction among groups and individuals. We are asking all Filipinos to cultivate in themselves a renewed sense of confidence through continued vigilance—not out of fear, but with the knowledge that most factors of viral transmission are under our personal control,” according to Dominguez.