By Beatrice M. Laforga
THE Philippines could now suffer up to $24 billion (P1.2 trillion) in economic losses if the coronavirus crisis lasts for six months, according to the Asian Development Bank (ADB).
New data from the ADB showed potential economic losses in the Philippines could range from $12.9 billion up to $23.9 billion, depending on the length of time it takes for the country to contain the coronavirus disease 2019 (COVID-19) outbreak and the government’s policy response.
Without the government’s policy measures, the ADB estimated economic losses would reach between $15.701-$23.941 billion (P796 billion and P1.213 trillion) — representing 3.9%-6% of gross domestic product (GDP). The extent of the losses would depend on the length of the containment period — whether three or six months.
ADB said government’s policy measures may soften the impact of the coronavirus pandemic on the economy. Factoring in these measures, potential economic losses from COVID-19 are estimated to be lower at $12.833-$18.256 billion (P650 billion-P925.237 billion). These losses would be equivalent to 3.2-4.6% of GDP.
This was an update from the previous estimate in late March, where the country’s potential economic losses were slightly lower at $19.035 billion at worst, and up to 2.5 million projected job losses.
So far, the Philippine government’s COVID-19 response package stands at $16.67 billion, representing 4.53% of GDP. This includes the rollout of a P200-billion cash aid program for the informal sector; P51 billion in wage subsidies for small businesses; a P120-billion credit guarantee for affected small firms; and increased budget for the Health department.
Currently, the government is looking at P130-160 billion in new programs to help the Philippine economy get back on track.
The ADB’s estimates were based on two scenarios — a “short” containment period of three months to get domestic outbreaks under control and economic activity to normalize, and a longer six-month containment period.
The ADB also considered the economic impact of border closures, travel restrictions, and lockdowns imposed by governments on domestic consumption, investment in China and other affected countries, trade, decline in tourism receipts, employment and income, and the impact of fiscal stimulus via income support.
After two months of enhanced community quarantine (ECQ), Metro Manila and other parts of the country on Saturday gradually eased lockdown measures in an effort to restart the economy.
The National Economic and Development Authority (NEDA) has estimated the pandemic’s potential economic impact at P2 trillion or 9.4% of GDP this year.
GLOBAL ECONOMY SUFFERS
The ADB on Friday said the global economy may suffer $5.8 trillion to $8.8 trillion in losses this year due to the pandemic.
ADB data showed Southeast Asia’s economic losses could hit $163-$253 billion or 4.6-7.2% of GDP. However, state interventions would cut potential economic losses by around 26-34% across the region to $119.6-$166.3 billion, which accounts for 3.4-4.7% of regional GDP.
Data from ADB showed Indonesia would be hardest hit in Southeast Asia with potential economic losses of $57.195-$87.912 billion (4.6-7.1% of GDP), followed by Thailand with losses of $30.412-$45.778 billion (5.4 -8.1% of GDP) and Singapore with $28.914-$45.147 billion (6.7 -10.5% of GDP).
The Philippines would be the fourth hardest-hit country in Southeast Asia, followed by Vietnam which could lose $7.516-12.926 billion (2.9-5% of GDP).
However, the Philippines’ COVID-19 economic package worth $16.68 billion is only the fifth- largest among 10 countries in the region. Thailand had the largest economic plan at $82.534 billion, followed by Indonesia with $57.97 billion.
According to ADB Chief Economist Yasuyuki Sawada, containing the outbreak is key to mitigating the economic cost. These include measures such as testing, contact-tracing, isolation of infected people, effective physical distancing and enough supplies of protective and medical equipment.
“Second, it is important for the government to support struggling families and businesses to mitigate the adverse impact of the pandemic and to avoid long-term consequences for growth and development,” Mr. Sawada said in a taped address posted online on Saturday.
While economies with local outbreaks and strict lockdowns will be “hardest hit as domestic demand weakens sharply,” Mr. Sawada noted that governments should still focus on containing the pandemic first as “rapid and effective containment will allow for a faster recovery.
“It is [also] critical to identify industries and occupations in terms of essentiality and economic importance and their ability to operate safely with adequate social distancing. Government should reopen the economy sequentially, balancing health risks and economic considerations and being ready to tighten if outbreaks recur,” he added.