When the World Health Organization declared COVID-19 as a global pandemic in March 13 this year, China was already preparing to lift lockdown restrictions in Wuhan where the contagious virus first appeared in December 2019.
At that time, China had already officially reported about 80,000 infections and more than 4,000 deaths. This had made for shocking statistics, and by official global count then, had put China as the leading country in the world in terms of cases and related fatalities.
The total lockdown of Wuhan, an industrial hub with 11 million people, together with further restrictions all over China on inbound and outbound travel was expected to weigh heavily on China’s economic performance during the first quarter of 2020 – and it did, pulling down GDP to negative 6.8 percent.
In the second quarter, as China cautiously eased restrictions and supported businesses to overcome difficulties experienced during the previous months, GDP sprang to a 3.2 percent growth. Export growth rigged up to double digits, while daily new infections were kept at low single digits.
The defining lesson for China that resonates is the need to keep the pandemic spread under tight control, and then to come up with the right mix of financial interventions for affected businesses to support economic growth.
Bleak outlook
A few other countries in Asia and Europe had managed to get this formula right, but many did not. Today, 37 other countries, including the Philippines, have overtaken China in the number of reported infections since, as total recorded deaths in the world due to the virus has surpassed 180,000.
As a result, on an optimistic basis, global GDP outlook may decline by five percent this year, with a possible rebound of 5.7 percent next year. Should uncertainties play a more dominant role, economic watchers fear a bleak scenario playing out, with contraction rates doubling.
Some of the uncertainties that would exacerbate the global economic recovery would be the continued unavailability of an effective vaccine within the next 12 months, an extended call for lockdowns in most economies especially should a second wave occur, and a withdrawal or drying up of stimulus funds especially in emerging economies.
Poor handling
The Philippines is not handling this crisis correctly. The lockdown in urban centers that affects 70 percent of the whole economy has dragged on too long as infection and death levels rise, consequently pushing the economy into dire straits.
From a 0.7 percent contraction of the GDP in the first quarter, the country now has chalked a decline of 16.5 percent in the second quarter. The forecast for the whole year has deteriorated to a contraction of 5.5 percent.
All this can be blamed on the poor way that our government officials at the national and local levels have managed to contain the virus spread, which was just under a hundred when the President called for a lockdown affecting half of the country’s population.
Today, we are on our way to breaching the number of reported cases in Germany, which was among the European countries that had called for a lockdown when infections were surging faster than desirable. Germany experienced its highest daily reported case of about 6,500 towards the end of March, but has since managed to bring it down to less than 2,000 a day or an acceptable reproduction rate of about 1.0.
The Philippines similarly continues to record an infection reproduction rate of about 1.0, but maintains a tougher lockdown policy that has just been painfully extended to the end of September. People are also now required to wear a face mask and face shield, sometimes even when just walking on the streets – and despite the soaring heat.
Difficult to surmount
Most Filipinos, as well as businesses that surmise they have a chance of surviving this pandemic, are left largely on their own on how to deal with the pandemic spread. It seems fatigue in dealing with the virus has also struck down our government officials.
The second tranche of the Bayanihan to Heal as One Law or Bayanihan 2 will likely be released this month, and while this is considered too little to save many micro, small and medium-sized enterprises (MSMEs), it is still something to look forward too, even if it can become available to most by yearend or early next year.
Already, a quick trip around neighborhoods show more commercial outlets shuttered, with postings of conspicuously freshly printed tarps announcing its lease or rental availability. Six months under lockdown certainly spelt the death of those previous occupants.
The fatigue on the economy is spreading, and unless our government is able to get a firm grip on how it can contain the pandemic spread, we will not see a favorable recovery next year, even if an effective vaccine will be available to all. The damage in the end will become too difficult to surmount, and recovery may take more than two years.
This may test the Filipino’s resiliency a little too far.
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