COVID-19’s impact on economies will spill over to next year such that the pandemic-induced economic losses in the Philippines would exceed 10 percent of gross domestic product (GDP) both in 2020 and 2021 especially due to a slow recovery in consumer confidence, according to the Asian Development Bank (ADB).
The Manila-based multilateral lender’s chief economist, Yasuyuki Sawada, told the Asian Development Bank Institute (ADBI) annual conference on Tuesday that across developing Asia, economic losses were estimated to breach 9 percent of GDP this year, citing the estimates of a forthcoming ADB report titled “The Impact of COVID-19 on Developing Asia: The Pandemic Extends into 2021.”
Both this year and in 2021, the COVID-19 crisis will most badly hit tourism-dependent countries while also inflicting massive losses on the services sector, Sawada said.
In the case of the Philippines, Sawada’s presentation showed that the pandemic would cut off more than 10 percent of GDP in 2020, with the biggest reduction to be wrought by domestic demand decline.
In Southeast Asia, Cambodia and Thailand will have bigger reductions in GDP this year on the back of the slump in global tourism as international borders mostly remained closed to avoid the virus from further spreading. The ADB had projected the Philippines’ GDP to grow by 6.5 percent in 2021.
Next year, the ADB’s estimates showed that the Philippines’ GDP would suffer from output and revenue losses equivalent to 10-percent GDP—poised to be the biggest in the region, still due to weak domestic demand.
The impact of a tourism slump and other global spillovers to domestic GDP was seen to be relatively smaller.
In terms of sectors, expected to incur larger losses during the next two years in the Philippines were business, trade, personal and public services as well as light/heavy manufacturing, utilities and construction.
The government had been gradually opening up the economy while fighting the spread of COVID-19 to resume consumer and business confidence.
Private-sector and household consumption accounted for about three-fourths of the Philippine economy.
In June, the ADB estimated the Philippines could shed as much as $38.1 billion (almost P1.9 trillion) or 11.5 percent of GDP if COVID-19 quarantine restrictions dragged on for six months.
Most of the country will remain under less-restrictive general community quarantine until end-December, even as the region’s longest and most stringent COVID-19 lockdown was first imposed in mid-March, stopping 75 percent of the economy at its height and leaving million of Filipinos jobless.
Sawada said reverting to prepandemic GDP levels across developing Asia-Pacific would be a slower “L-shaped” recovery taking several years.