The world has experienced a prolonged period of unrest and uncertainty caused by the COVID-19 pandemic. To date, it has already affected the lives of over 10 million people in 213 countries and territories around the world. The human cost is rapidly being matched by its devastating economic costs. What initially started as a health crisis has morphed into a full-blown economic crisis which has affected the world much more than the 2008 financial crisis. It has led to business shutdowns, devastated consumption activities, and has paralyzed the economy. The economy, which is mostly dominated by consumerism, has come to a halt which has caused serious consequences especially for service providers, retailers, and financial institutions. Such development has set politicians and policymakers scrambling to mitigate and offset the damages in their respective countries.
In this section, we’ll discuss:
The COVID-19 pandemic is more than just a health crisis: it is affecting economies and societies at their core. While the impact of the pandemic will differ from one country to another, it will most likely increase inequalities and poverty at a global scale. There is no way to tell exactly what the economic damage from the global coronavirus pandemic will be; however, there is widespread agreement among economists that it will have drastic negative impacts on the global economy.
Early estimates predicated that, should the virus become a global pandemic, most major economies will lose at least 2.4% of the value of their gross domestic product (GDP) over 2020. This influenced economists to reduce their 2020 forecasts of global economic growth down from 3.0%[ to 2.4%[. Putting this number in perspective, the global GDP was estimated at about $86.6 trillion in 2019; this means that just a 0.4% drop in economic growth equals to around $3.5 trillion in lost economic output. However, these predictions were made before COVID-19 became a global pandemic, and before restrictions on social contact to stop the spread of the virus were implemented.
Since then, global stock markets have suffered significant falls due to the pandemic, and the Dow Jones reported its largest-ever single day fall of nearly 3,000 points on March 16, 2020 – beating its previous record of 2,300 points that was set only four days prior. Furthermore, the June 2020 Global Economic Prospects[ describes both the immediate and near-term outlook for the impact of the COVID-19 pandemic and the long-term damage it has dealt to economic growth prospects. The baseline forecast predicts a 5.2% contraction in global GDP in 2020, using market exchange rate weights – the deepest global recession in decades, despite the efforts of governments to counter the downturn with monetary and fiscal policy support.
In the long-run, the deep recession triggered by the coronavirus pandemic is expected to leave lasting scars in the economy through the fragmentation of supply linkages and global trade, an erosion of human capital through lost schooling and work, and through lower investments. The coronavirus crisis accentuates the need for urgent action to mitigate the pandemic’s economic and health consequences, protect susceptible populations, and set the stage for a lasting recovery. For developing countries and emerging markets, many of which face overwhelming vulnerabilities, it is crucial to strengthen public health systems and implement reforms that will support sustainable growth once the health crisis subsides.
Global cooperation and coordination – of the measures necessary to slow the spread of the pandemic, and of the economic actions necessary to ease the economic damage, including international support – provide the best chance of achieving public health goals and enabling a strong global recovery.
The COVID-19 pandemic has been devastating for Philippine business owners and their workers. All major industries are currently dealing with the devastating effects of COVID-19. From marketing to manufacturing, 2020 has seen major changes in the way organizations and businesses operate in the wake of the virus.
Of the total 75 million jobs at risk around the world, 2.1% is from the travel and tourism industry. As lockdown measures of different countries have grounded flights, major airline companies have announced job cuts and some has even filed for bankruptcy. In an online forum of the German-Philippines Chamber of Commerce and Industry (GPCC), Gregor Zajc, Blue Horizons Travel and Tours, Inc. General Manager, gave a picture of the Philippines’ tourism industry before and during the pandemic.
In 2019, the Philippines recorded 8.26 million international visitors – 15% higher than 2018 figures. Top sources of foreign visitors in the country in 2019 were China, Japan, South Korea, Taiwan, Singapore, Malaysia, Canada, Australia, United Kingdom, and the United States. The tourism sector contributed 12.7% to the Philippine economy, employing 5.4 million people. With the COVID-19 pandemic and quarantine measures implemented, tourist arrivals in the country fell by 54% to 1.3 million from January to April 2020 from 2.8 million visitors in the same period last year. Gregor Zajc added that many tourism establishments, travel agencies, and hotels are closing as they can no longer absorb the impact of the pandemic to their business.
Yet, everything was suddenly put on hold. The Philippine media and entertainment industry is at a standstill due to the COVID-19 pandemic. In line with the announcement of President Duterte on March 12, 2020 and the recommendations of the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases related to COVID-19, the Film Development Council of the Philippines (FDCP) has issued three Memorandum Orders. These memorandum orders reiterate that all audio-visual productions, events, and screenings must be suspended during the Enhanced Community Quarantine because cinema as an art form brings about mass gatherings. Audio-visual companies are also encouraged to implement work-from-home arrangements, save for the skeletal workforce of news media outlets.
The Film Development Council of the Philippines (FDCP) also developed its Disaster/Emergency Assistance and Relief (DEAR) Program to provide financial assistance to freelance entertainment press and audio-visual workers affected by the pandemic and ensuing quarantine. By reallocating its event budgets, the FDCP set aside Php 20 million to fund its DEAR Program benefitting the film industry’s most vulnerable workers.
While some public hospitals have received PPE donations and free shuttle rides for frontline responders, other hospitals are still struggling with shortages in medical personnel and supply. For a country of almost 109 million, the Philippines only has around 89,000 hospital beds and only 1,000 intensive care units (ICUs). The Philippines has a total number of 129,000 licensed physicians, 80,000 are members of the Philippine Medical Association (PMA) – out of this number, only about 50% are active in the profession.In terms of 2020 budget allocation, the Department Health’s (DOH) budget is Php 166. Billion which includes PhilHealth (Philippine Health Insurance) and Php 7 billion budget under the miscellaneous and Personnel Benefits Fund.
According to S&P Global[, the industries most and least impacted by COVID-19 are as follows:
The five industries most impacted by COVID-19 are:
Industry | Median PD as of March 1, 2020 | Median PD as of March 31, 2020 |
Airlines | 9.84% | 23.16% |
Casinos & Gaming | 6.41% | 16.46% |
Leisure Facilities | 5.64% | 19.74% |
Auto Parts & Equipment | 8.57% | 18.81% |
Oil & Gas Drilling | 9.1% | 22.5% |
The five industries least impacted by COVID-19 are:
Industry | Median PD as of March 1, 2020 | Median PD as of March 31, 2020 |
Property & Casualty Insurance | 0.59% | 1.06% |
Health Care REITs | 0.55% | 0.52% |
Multi-line Insurance | 0.59% | 0.92% |
Life & Health Insurance | 0.62% | 1.00% |
Industrial REITs | 0.08% | 0.55% |
The International Monetary Fund (IMF) has further reduced its economic outlook for the Philippines, predicting gross domestic product (GDP) to shrink by 3.6% this year. The updated GDP forecast contained in the IMF’s World Economic Outlook June 2020 Update reversed its previous forecast in April of about 0.6% growth in 2020. Furthermore, the IMF’s updated Philippine GDP projection is worse than the government’s estimates of about 2% – 3.4% decline. But despite the revised projection, IMF Resident Representative Yongzheng Yang said they continue “to expect a recovery in 2021, albeit at a slower pace than previously projected.”
The IMF projected the Philippine economy to revert to a 6.8% growth by 2021. “The downward revision to growth forecasts is mostly attributable to larger-than-expected supply disruptions related to COVID-19 and weaker demand in major trading partners,” said Yang in an email. “Based on the information that has become available since our April WEO forecasts, we now expect the resolution of COVID-19 to be more gradual, and hence the impact of the pandemic on the economy to be larger and longer than previously anticipated,” he added. Yang also said, “To protect the recent progress on poverty reduction, social protection programs should be strengthened as current temporary income support measures are phased out. Moreover, speedy policy implementation will be crucial to mitigate the scarring effects of COVID-19 on the economy.”
