COVID-19 takes heavier toll on PH among ASEAN economies

The coronavirus pancemic is taking a heavier toll on the Philippine economy than its neighboring countries due to government’s reliance on stringent lockdowns instead of early scaling up of its testing capacity, and contact tracing efficiency, the World Bank said yesterday.

As the country’s economy is seen by the Washington-based lender to shrink by 1.9 percent this year, World Bank Senior Economist Rong Qian warned that Filipinos have yet to see the full-extent of the coronavirus pandemic.

Noting the local coronavirus infections had “not yet peaked," the World Bank already downgraded its 2020 gross domestic product (GDP) forecast for the Philippines by as much as eight percentage points, among the largest revisions in the Southeast Asian region.

Qian attributed the huge downward revision on the Philippines’ approach to contain the spread of the coronavirus disease (COVID19) that already affected at least 22,474 people and claimed more than 1,000 lives.

“We are among the largest downward revision. I think part of the reason is because the Philippines is the first one to impose the very strict community quarantine which basically shutdown the economy for almost two months,” Qian said.

“Other countries are not doing that precisely as you know that the Vietnam was not doing that and they are more focusing on the contact tracing and testing. So that's explaining a large part of the why the GDP downward revision is larger,” she added.

The World Bank senior economist also noted that the Philippines

was affected by the eruption of Taal Volcan in January.

In its June 2020 Global Economic Prospects report, World Bank said the Philippines together with Malaysia and Thailand will “experience the biggest contractions this year” in the East Asia and Pacific region.

“This reflects the significant impact of domestic lockdown measures, as well as the impact from reduced tourism, disruption of trade and manufacturing sector, the spillovers from financial markets, and lower commodity prices,” the bank said.

Achim Fock, World Bank, acting country director for Philippines also said the economic contraction in 2020 will likely cause an increase in poverty.

“Containment measures have cut off income streams from seasonal wage earners and those engaged in entrepreneurial activities in non-agricultural activities and low-end service jobs, which were the drivers of poverty reduction in recent years,” the World Bank report said.

“During these difficult times, strengthening the capacity of the health care system to control the outbreak while protecting poor and vulnerable households remains an urgent task for the country,” Fock said.

“Similarly, financial support to affected firms, especially small and medium enterprises, to prevent job losses and bankruptcy, can help ensure that the recent shocks do not cause permanent damage to the country’s productive capacity and human capital,” he added.

But despite the country’s greater economic cost from the pandemic, World Bank said there are good chances that the Philippines can bounce back in the next two years.