COVID-19 toll on economy to hit P41.4T, says Neda

Weaker private consumption, investments and government revenues coupled with workers’ lower productivity due to school closures and illness amid the COVID-19 pandemic will cost the Philippine economy up to P41.4 trillion in output losses up to 2060, according to the National Economic and Development Authority (Neda).

In a Sept. 16 presentation to the public-private Task Force T3 or Test, Trade and Treat, Socioeconomic Planning Secretary and Neda chief Karl Kendrick Chua said the pandemic and its ensuing lockdowns cost the economy P4.3 trillion in foregone output last year alone.

During the next 10 to 40 years, the long-run total cost inflicted by COVID-19 was estimated to reach P37 trillion, Chua said.

The Neda chief said “consumption and investment will be lower in the next 10 years due to lower demand in sectors that require social distancing, such as amusement, tourism, restaurants and public transportation.”

Foregone revenues

These demand-side losses would also result in foregone revenues from corporate, personal and value-added taxes (VAT) amounting to about P1.2 trillion in the next 10 years, Neda estimates showed.

While the Philippine economy was expected to converge to its prepandemic growth path 10 years from now, Chua warned that “workers’ productivity will be lower due to death, illness, and lack of schooling.”

“The impact on productivity is likely to be permanent”, Chua said.

Neda estimates showed that the pandemic will shed P4.5 trillion from consumption, P21.3 trillion from private investment and returns, as well as P15.5 trillion from human capital investment and returns in the education and health sectors during the next one to four decades.

Long-term scarring

To address this long-term scarring on the economy, Chua urged the government to “ensure strong recovery in 2021 and 2022 with growth rates of 4 to 5 percent and 7 to 9 percent, respectively, by accelerating vaccination of all adult Filipinos to reach 70 million by end-2021 by expanding vaccination sites, including work sites, removing artificial barriers, and using technology to reduce the wait and processing time.”

Chua also highlighted the need to manage risks better, open the economy safely, allow selected family activities to resume, allow limited in-person schooling and then impose localized lockdowns in highest risk areas, as the strictest quarantine restrictions could only postpone any surge in COVID-19 infections.