The Philippines may suffer economic losses of P276.3 billion to P2.5 trillion due to the coronavirus pandemic, according to a study of state think tank Philippine Institute for Development Studies.
The study titled “Projected Disease Transmission, Health System Requirements and Macroeconomic Impacts of the Coronavirus Disease 2019 in the Philippines” said the most affected sector would be manufacturing with projected losses of P82.1 billion to P855.2 billion.
The study was conducted by PIDS senior research fellow Michael Abrigo, research specialist Jhanna Uy, research fellow Valerie Gilbert Ulep and PIDS consultants Nel Jason Haw and Kris Francisco-Abrigo.
It said other vulnerable sectors were wholesale and retail trade with projected losses of P93.2 to P724.8 billion; transport, storage and communication because of expected declines in tourism with P11.7 billion to P124.3 billion and other services with P41.5 billion to P356.9 billion.
“Projections from combined disease transmission, micro-simulation and macroeconomic models suggest that the country’s gross value added may decline between P123.5 billion to P2.5 trillion,” it said.
The PIDS study said extending the Luzon-wide enhanced community quarantine for another month “may potentially cost the Philippine economy at least P150 billion due to the possible declines in household consumption as workers remain unemployed” during the period.
Based on the distribution of household incomes in 2015, “about three in every five 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, it said.
The COVID-19 outbreak has already caused a significant decline in the price of crude oil in the first quarter as countries imposed extreme measures such as lockdowns and cross-border closures to stop the spread of the disease.
The stock market has also dwindled, 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.”
The study recommended that the government undertake a “gradual and calibrated transition to a risk-based strategy that combines relaxation of economic restriction while controlling the spread of the virus”.
It proposed 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 such as garments factories to produce PPEs and distilleries to produce alcohol.
It said that “other businesses may need to be developed such as research, digital platform deliveries and manufacturing to supply goods and services that cannot be readily sourced from the international market.
It said public transportation should be allowed to operate partially to facilitate the movement of essential economic transactions.
The study said commuters should strictly follow the guidelines on social distancing and that the government may “opt to directly hire drivers or operators in a cash-for-work program to effectively control public transportation”.
It called on public officials to “ensure the continuous and unencumbered flow of goods and services” during the crucial period and 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.