COVID's economic costs
About one percentage point may be shaven from this year’s gross domestic product growth in the Philippines as a result of a slowdown in economic activities due to the 2019 coronavirus disease contagion, Socioeconomic Planning Secretary Ernesto Pernia said yesterday.
In a growing number of countries, the COVID-19 threat has shut down factories and top tourist destinations and cancelled international gatherings. Japan’s temporary closure of schools further stoked speculation that the Tokyo Olympics from July to August this year might also have to be postponed. In Rome, the biggest draw for travelers – Pope Francis – has taken an unprecedented weeklong leave while nursing a cold and cough.
The international travel and tourism industry is reeling from COVID-19. Also affected are the numerous travel-related downstream enterprises. With three of the world’s manufacturing powerhouses badly hit – China, Japan and South Korea – global supply chains have been seriously disrupted, with the Philippines also feeling the impact. Stock markets have been battered and the oil-producing countries, which host millions of overseas Filipino workers, are seeing drastic reductions in demand.
A vaccine is still about a year away, while the virus continues to spread. No one knows how long the global uncertainty will last. Governments must be on emergency mode to deal not just with the public health threat but also with the economic impact of the contagion. Unemployment and underemployment could spike, not only within the country but also abroad, affecting workers’ remittances and the Philippines’ consumption-driven economy.
The country is fortunate that it doesn’t have to resort to lockdowns of entire cities to contain the COVID-19 threat. So local production can continue and consumption can be stimulated. The government together with the private sector can work to create jobs and livelihood opportunities for those who may be affected. In this contagion, economic displacement is as much a concern as public health.