‘Longer lockdown to delay economic recovery in Philippines’

MANILA, Philippines — The extension of the strict community quarantine in key economic areas in the Philippines until the end of the month will delay the country’s economic recovery, London-based think tank Capital Economics said.

The government announced on Tuesday that Metro Manila, Cebu City and Laguna – considered high-risk areas for the coronavirus disease 2019 or COVID-19 – will remain under enhanced community quarantine (ECQ) although in a modified form until May 31.

President Duterte approved the fresh extension of the ECQ in these areas upon recommendation of the Inter-Agency Task Force (IATF) on Emerging Infectious Diseases under Resolution 35.

A modified ECQ means businesses engaged in essential services will be allowed to partially operate, subject to strict quarantine measures. However, movement of people will still be restricted to going to work, and buying essential products and services.

Lockdown restrictions will be eased in other parts of the country and removed in others beginning May 16.

“A recovery should begin to take shape once restrictions start to be eased. A gradual pick-up in global demand should also provide some support,” said Capital Economics in a new research brief titled “Philippines: Lockdown extension to delay recovery.”

“Nevertheless, for the year as a whole, we think the economy will contract by six percent, which would be the biggest drop since 1985. It would also make the Philippines the worst-hit country in the region relative to its 2019 performance.”

The Philippines extended the lockdown in the three areas as other countries in the region have begun easing restrictions to mobility.

Metro Manila remains as the country’s economic powerhouse, generating 70 percent of the country’s economic output, while Laguna and Cebu City are highly urbanized areas.

Citing data from Google’s Community Mobility Reports, Capital Economics noted that attendance at workplaces in Metro Manila has fallen by nearly 60 percent since the crisis began, making restrictions in the country among the toughest in Asia.

In response to the economic impact of the pandemic, the Development Budget Coordination Committee (DBCC) adjusted the country’s economic performance projections to a contraction of between two and 3.4 percent in 2020 as disruptions are seen to cost businesses around P2 trillion this year, about 9.4 percent of the economic output.

If realized, this will be the fastest decline since gross domestic product (GDP) contracted by 6.9 percent in 1985, the year before the Marcos regime was overthrown and when the country struggled with a debt crisis.

The DBCC, however, projected a strong economic recovery of between 7.1 to 8.1 percent in 2021 because of the  “timely implementation of a well-targeted recovery program, alongside efforts of the private sector,” to restore business confidence and employment to pre-crisis levels.

President Duterte said the third extension and revision in the scope of the ECQ in the three areas was made to prevent the occurrence of a second or third wave of infections that will overburden the health sector.

Health Undersecretary Maria Rosario Vergeire said health indicators such as case doubling time and capacity to provide critical care were taken into consideration in classifying quarantine status for regions.