45-day ECQ cost PH economy P1.1 trillion, says Neda
The Philippine economy lost an estimated P1.1 trillion in the agriculture, industry and services sectors during the first 45 days of COVID-19 lockdowns, according to the state planning agency National Economic and Development Authority (Neda).
The losses, equivalent to 5.6 percent of gross domestic product (GDP), were most felt in the National Capital Region (NCR) as it was the country’s services hub, as well as in Calabarzon where industrial activity ground to a halt when enhanced community quarantine (ECQ) was imposed in Luzon and other parts of the country since mid-March to contain the spread of the COVID-19 disease.
Luzon was home to 56 percent of the nationwide population, and accounted for 73 percent of GDP, Neda noted in a report.
Neda estimates showed that under a 45-day ECQ, the country’s agriculture sector suffered P94.3 million in losses; the industry sector, P537.7 billion; and services, P589.7 billion.
The initial one-month ECQ was extended until end-April, and prolonged until mid-May in areas with high COVID-19 cases.
A less restrictive general community quarantine (GCQ) setup covered areas with fewer COVID-19 patients since early May, while a modified enhanced community quarantine (MECQ) was declared in COVID-19 hotspots to resume some economic activity while supposedly keeping strict physical and social distancing since mid-May.
In Metro Manila—the Philippines’ political and commercial center—economic losses amounted to P589.3 billion, with the biggest chunk of forgone revenues coming from the services sector, at P454.8 billion.
Calabarzon suffered the second biggest output losses among the country’s 17 regions, with P265.1 billion.
Since it hosted sprawling economic zones whose operations were halted during ECQ, industry losses in Calabarzon reached P244.5 billion, exceeding NCR’s P134.4 billion.
Total losses across the agriculture, industry and services sectors in the 15 other regions were as follows: Cordillera Administrative Region (CAR), P9.6 billion; Ilocos, P13.7 billion; Cagayan Valley, P12.9 billion; Central Luzon, P83.6 billion; Mimaropa, P9.2 billion; Bicol, P14.6 billion; Western Visayas, P17.6 billion; Central Visayas, P37.7 billion; Eastern Visayas, P9.5 billion; Zamboanga Peninsula, P4.9 billion; Northern Mindanao, P10.1 billion; Davao, P13.5 billion; Soccsksargen, P8.27 billion; Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), P890 million; and Caraga, P7.2 billion.
Citing results of online surveys among consumers, small businesses, farmers and fishermen that Neda conducted with the Department of Finance (DOF) last April, Neda said that “during the ECQ, some families had to depend on the assistance provided by the national government and local government units (LGUs) just to cope.”
Amid the COVID-19 crisis, the government gave away P5,000-8,000 to 18 million poor households under its social amelioration program (SAP), as well as the same range of wage subsidies to temporarily displaced employees of micro, small and medium enterprises (MSMEs).
Among MSMEs, “many had zero sales, but maintained their payroll,” Neda said.
“To cope, others had to resort to borrowing or using up their savings. The losses experienced will need to be mitigated to accelerate the resumption of economic activities,” Neda added.
The Neda estimates for industry losses included forgone revenues in manufacturing, mining and quarrying, and construction. Losses in services covered retail trade, tourism, private education, as well as the banking sector.
“The estimate assumes only a 45-day lockdown period in Luzon. For Visayas and Mindanao, the number of days of ECQ varies per province. Moreover, the losses in the transport sector have not been included,” Neda said.
First-quarter GDP already shrank by 0.2 percent and the extended COVID-19 lockdown during the second quarter was expected to bring the Philippines into recession, with the economy projected by economic managers to decline by 2-3.4 percent for the entire year.
Last week, acting Socioeconomic Planning Secretary and Neda chief Karl Kendrick T. Chua said the recession would likely bring the unemployment rate to double-digits during this quarter.
A double-digit unemployment rate shall be the highest in 15 years or since April 2005’s 8.4 percent, the year that the government adopted the current metrics in measuring employment, National Statistician Claire Dennis S. Mapa had told the Inquirer.
The Philippine Statistics Authority (PSA) will release official employment data through the results of the April labor force survey (LFS) on June 5, but Chua said the government addressed temporary job losses by providing the SAP dole-outs on top of wage subsidies to beneficiary families and workers.
Department of Labor and Employment (Dole) estimates as of mid-May showed that 2.5 million workers had been stricken by work suspension, flexible working arrangements and business closures due to the COVID-19 crisis.
The pandemic reversed the latest labor gains when the jobless rate was only 5.3 percent in January.
Chua had been nonetheless optimistic about a quick or “V-shaped” recovery by the second half of 2020, noting that while 80 percent of the economy stopped at the start of the lockdown, more than half had already resumed activity this month.
By next month, two-thirds of the economic engine will be humming under relaxed restrictions poised to become the new normal during the second half, according to Chua.
Edited by TSB
The Inquirer Foundation supports our healthcare frontliners and is still accepting cash donations to be deposited at Banco de Oro (BDO) current account #007960018860 or donate through PayMaya using this link.