FOR the last 15 months, the world faced an adversary like no other – killing more than what any world war has ever recorded, people losing jobs, displacing businesses, education, hunger and instilling endless anxiety to billions of people across the globe. The Philippines is no exemption.
Since the onset of the deadly virus from Wuhan [China] early last year, the Philippine government has had its share of downsides in view of its decision to impose a variation of lockdown levels to contain the radical upward trajectory of life-threatening infections.
It has since been a daily struggle for both the businesses and the working class to survive the national health emergency. More than the health and safety concerns, the pandemic forced the economy to a standstill, forcing a long list of legitimate businesses to close shop for good or scale down operations just to keep afloat.
To sum it all up, the national health emergency “mutated” to become an economic crisis as private business corporations were forced to shut down in view of the heavy losses, and in effect rendering millions of Filipinos jobless.
Looking Back 2020
The truth is that not one country – not even the superpowers – was able to prepare for a game-changing pandemic we now aptly refer to as COVID-19.
It was March 15 last year when President Rodrigo Duterte appeared on national television to declare a wide-scale lockdown. The lockdown, referred to as “enhanced community quarantine,” compelled people to stay at home, while businesses were ordered closed. It was zero business activity – no work, no business, no transportation, no schooling.
After two and a half months, the President issued an order relaxing the restrictions and allowing calibrated resumption of business activities as numbers representing the contamination rate showed a significant slowdown.
However, another surge of infections ensued in July, prompting the government to ramp up its COVID-19 testing capabilities, construct more isolation and quarantine facilities, invest on medical logistics and hire more healthcare workers. It was also then that the government started strict enforcement of the mandatory wearing of face masks and face shields.
So that was how work and business places looked like since then – workers and clients’ faces concealed behind these personal protective masks and shields.
It was also then that the government and the private sector realized the importance of going digital.
The outbreak of the COVID-19 pandemic has rapidly transformed into an unprecedented global economic and labor market crisis, with severe impact on the world of work in the Philippines.
In a recent report published by the International Labor Organization, it has deciphered the multi-dimensional impact on employment and the labor market. It also provided an account of the evolution of COVID-19 in the Philippines.
Similarly, the Philippine Statistics Authority (PSA), a government agency dealing with numbers in relation to significant issues and developments, has also been making its own research and study as to the extent of the damages incurred by both the businesses and the labor force in view of the continuing pandemic scare.
Data posted on the PSA website showed the Philippines suffered the highest unemployment rate in April 2020 – at 17.6 percent, surpassing the previous record of 10.3 percent. The latest record-high figure of unemployed Filipinos 15 years old and over was posted at 4.2 million in February 2021, or about 234,000 higher than the reported 4.0 million in January 2021
Interestingly, the PSA in its latest Employment Situation report showed that the situation somehow improved with the government’s decision to strike a balance between health and economy.
Accordingly, the PSA claimed that the Philippine unemployment rate fell to 7.1 percent in March 2021. This is the lowest reported rate covering the period of the Corona virus disease 2019 (COVID-19) pandemic since April 2020.
PHL Economy as per Moody’s
According to Moody’s Analytics, the Philippines may not be able to hit its 2021 economic target of 7 percent. In a report, Moody’s Analytics economists Katrina Ell and Dave Chia said they expected gross domestic product (GDP) to grow by only 5.3 percent this year, below the government’s downscaled 6 to 7 percent target.
“The Philippines isn’t forecast to return to pre-pandemic levels of output until the end of 2022. In contrast, China, Taiwan, South Korea and Vietnam have returned to previous output levels, while Indonesia and Thailand are on track to return this year. This makes the Philippines the clear laggard in Asia,” they said.
Moody’s Analytics attributed the imminent target miss to what it described as a sluggish mass inoculation program.
Moody’s Analytics said the Philippines lagged behind most of its neighbors in vaccination due to earlier problems in securing sufficient doses of COVID-19 jabs, although “the problem has eased somewhat with the government recently increasing its sources.”
Moody’s Analytics stood firm that for the Philippine economy to be able to go back on track, the government should ramp up on its efforts to inoculate the working class to whom the economy largely depends on.
Relatedly, Moody’s Analytics also hinted at massive misinformation as the reason why many have remained reluctant to getting COVID-19 jabs.
While joblessness declined as the economy gradually reopened, March’s 7.1-percent jobless rate remained the highest in emerging Asia.
PHL Economy as seen by WB
In a separate report, the World Bank said that “in Indonesia and the Philippines—two major regional economies that were not able to control the disease—both supply and demand factors weighed on growth,” especially in industrial production last year.
According to WB, “As of the end of 2020, industrial production in the Philippines remained about 3 percent below its level in January 2020,” World Bank economists Ergys Islamaj, Franz Ulrich Ruch and Eka Vashakmadze said in their report titled “Demand and Supply Dynamics in East Asia during the COVID-19 Recession.”
As such, the World Bank noted that retail sales had slowed in the Philippines mainly due to supply shocks caused by the strictest COVID-19 quarantine in the region.
Across the East Asia and Pacific region, economies were expected to face deficient demand this year, with the output gap seen to be the biggest in the Philippines.
Large pandemic-induced shocks in the Philippines led to negative and large output gaps, exceeding negative 5 percent of potential output for 2020. For the Philippine economy, output gaps are multiple times larger now than during the global financial crisis.
Output gaps in the country’s economy are expected to remain negative in 2021.
At any rate, the Bangko Sentral ng Pilipinas has been doing heavy lifting toward economic rebound—given the expected low-core inflation over the next two years, there is room for monetary policy to support demand, especially in economies hardest hit by the outbreak – and that would include the Philippines.
PHL Economy as per DOF
Taking cue from the recommendation of Moody’s Analytics and the World Bank, the Philippine government, through its Department of Finance hinted at an economic rebound in the next quarter.
According to Finance Secretary Carlos Dominguez, the country’s gross domestic product (GDP) is seen to grow faster as the number of coronavirus infections has dropped from April’s peak and more vaccines have arrived.
If the upcoming batches of vaccines will arrive as scheduled, the finance chief said the Philippines could see a “significant containment” of the outbreak next semester and allow more businesses to resume operations and employees and entrepreneurs to return to work.
Realizing the importance of the resumption of economic activities, the government has in fact downgraded its lockdown level to the third most stringent category if only to allow more businesses to operate – but on a calibrated basis.
Around 2.2 million more jobs have been created in March based on the official estimates by the Philippine Statistics Authority (PSA), after the unemployment rate went down to 7.1 percent from 8.9 percent a month earlier.
State spending on infrastructure grew 26.7 percent in the first quarter, providing confidence that this form of government recovery-employment-boosting spending has gained traction and should continue at a fast pace for the rest of the year.
Goods exports likewise jumped by 31.6 percent year-on-year-in March, turning around from the 2.3 percent slump the month before.