Economic impact of the COVID-19 pandemic in the Philippines
The economic impact of the COVID-19 pandemic in the Philippines has been largely disruptive. They adversely affected employment, food services, food and medical supplies, and retail.
Economic indicators
The National Economic and Development Authority revised its economic growth outlook for the Philippines in 2020 from a 6.5% to 7.5% gross domestic product growth registered in late 2019 to a 5.5% to 6.5% GDP growth, following the pandemic. The NEDA cited the decline in service exports, especially tourism. Moody's Analytics also reduced their GDP growth outlook for the country, from 5.9% in 2019 to 4.9% following the pandemic. Meanwhile, Nomura gave a bitter prediction of 1.6%, while the International Monetary Fund gave an almost flat growth of 0.6% for this year before rebounding to 7.6% in 2021.Bangko Sentral ng Pilipinas Governor Benjamin Diokno and then-NEDA Director-General Ernesto Pernia forecast that the Philippine economy would likely enter a recession in 2020 due to the effect of the pandemic. Diokno stated that, although the first quarter is likely to grow by 3% since the Luzon-wide enhanced community quarantine only took effect near the end of the quarter, the second and third quarters would likely experience contractions in economic growth.
The Philippines' real GDP contracted by 0.2% in the first quarter of 2020, the first contraction since the fourth quarter of 1998, a year after the Asian financial crisis, with a technical recession deemed "likely" to be posted within 2020.
On the other hand, the BSP records an inflation rate of 2.2% in April and 2.5% in March compared from 2.6% in February and 2.9% in January. The average rate of 2.6% for the period of January to April 2020 is also 1% lower compared to the inflation rate from the same period in the previous year. The event was primarily and hugely caused by lower oil prices and transportation costs, even if the prices of food supplies and alcoholic beverages and tobacco slightly rose.
In terms of the amount of economic loss that the Philippines is projected to suffer, NEDA gave a value of up to, or equivalent to about 9.4% of 2020 nominal GDP, while the Philippine Institute for Development Studies estimates at a maximum of. International organizations also gave their predictions, with the Friedrich Naumann Foundation envisioning a loss and the Europe Solidaire Sans Frontières envisioning a combined loss of more than just in the month of April.
The pandemic also affected the goal of the Philippines to be among the countries with upper-middle-income country status by nominal GNI per capita. Before his resignation, Pernia said that the country will still achieve this goal by 2020, while his replacement, acting NEDA Director-General Karl Kendrick Chua, said last May that this goal will be achieved in 2022. Daniel Ross of Bloomberg also stated that the Philippines, which is "an economic star poised to outpace long-time regional winners such as China, Indonesia and India," will face hindrances amidst the COVID-19 pandemic.
On March 9, 2020, the Philippine Stock Exchange index lost 457.77 points or 6.76%, its steepest decline since the financial crisis of 2007–08. The following day, shares plunged by 6.23% to , settling below the 6,000 level benchmark and entering the bear market territory. The mining and oil industries were the most affected with a 9.05% drop, followed by holding companies with a 6.93% drop. The PSE's circuit breaker mechanism was invoked for the second time since the measure's introduction in 2008 halting trade for 15 minutes.
Employment
In terms of unemployment rate, the Philippine Statistics Authority records an estimated unemployment rate of 5.3% in January 2020, which is the same with January 2019. Moody's Analytics puts its estimate at 5.3% for the first quarter of 2020, while Nomura expects 7.5% for Q1 and a 13-year high of 8% in Q2 of this year. Meanwhile, the IMF stated that the unemployment rate in the country would be 6.2% for this year compared to 5.1% in 2019. A higher rate of 6.8% for this year was also predicted by S&P Global Ratings.The Trade Union Congress of the Philippines estimates that around 7,000 people may lose jobs within the first half of 2020 due to the pandemic. Economists from the Ateneo de Manila University estimate that 57% of the country's workforce may be displaced within the end of the first quarter of 2020. It comprises around 15 million workers in Luzon that were laid off due to the enhanced community quarantine, around four million of whom are based in Metro Manila, as well as an estimated 4.3 million workers in Visayas and another 4.3 million in Mindanao that were laid off due to quarantine restrictions.
In March, the Department of Labor and Employment stated that 1.05 million workers were displaced due to the pandemic, even after they released guidelines for employers in handling the impact of COVID-19.
Philippine aviation services were heavily affected after travel, both locally and internationally, was restricted to contain the spread of the virus. Philippine Airlines, the country's flag carrier, decided to lay off 300 of its workers due to losses caused by the pandemic. Philippines AirAsia also dropped its plan to debut in the PSE within 2020 and decided to focus on expanding its domestic operations after a government ban on China and South Korea threatened 30% of its revenue. Employees of Cebu Pacific, the country's largest airline, compromised on a pay cut amounting to 10% to avoid layoffs. However, Cebu Pacific eventually laid off over 150 cabin crew personnel near the end of the first quarter as more countries and provinces in the Philippines implemented travel restrictions, affecting its flights. Airline logistics firm 1Aviation Groundhandling Services also laid off 400 newly hired workers without regular status.
The University of Santo Tomas Hospital retrenched its non-essential staffs after reporting financial losses from unpaid PhilHealth claims and underpayment of some COVID-19 patients. The following day, the decision was put on a hold, which will be decided if it will proceed or not on May 20. Some German businesses that are based in the country also reported to reduce investments in the country, but will continue to maintain their employees.
Food service and supply
Following directives from the Philippine government, several fast food and restaurant chains suspended dine-in services and restricted operations to take-out and delivery. Following the Luzon-wide enhanced community quarantine, online food ordering services such as GrabFood and Foodpanda temporarily halted but eventually resumed operations in Luzon during the quarantine period.Several restaurants and coffee shops across the country offered free food and beverages to front line professionals involved in the pandemic, especially health care workers.
Food production and distribution slowed down during the pandemic, especially in Luzon, primarily due to the lack of financial assistance and inaccessibility of transportation resulting from community quarantine measures being implemented across numerous local governments. The delivery of fresh vegetables from the province of Benguet, which supplies the country with over 80 percent of the country's highland vegetable requirements, was halted due to the implementation of an "extreme enhanced" community quarantine in La Trinidad. Local government officials advised local rice farmers to sell their harvests to them, assuring them that they would help distribute it to their respective communities amid the border restrictions.
On March 27, Vietnam announced that it would reduce its production and exportation of rice due to food security amid the pandemic. The Philippines, the largest importer of rice in the world, imports 25% of its rice from Vietnam. Agriculture Secretary William Dar assured that there would be "no shortage of the staple during the duration of the enhanced community quarantine and beyond" as "harvest already coming in." Dar also stated the Department of Agriculture's plans to initiate early planting in the Cagayan Valley and Central Luzon, two of the largest rice producers in the country, ahead of the third quarter of 2020.
Production of canned fish in the country was adversely affected with Zamboanga City, which accounts for 85% of the country's canned fish industry, announcing it would reduce the production of canned fish in the Philippines by 50–60% due to difficulties encountered following the implementation of a city-wide lockdown.
Medical supply
A shortage of medical masks was reported in various parts of the country due to concerns over the pandemic. RITM director Celia Carlos urged the public against hoarding masks to ensure ample supply for medical workers directly dealing with patients suspected or confirmed to have COVID-19 infection. The Department of Trade and Industry, in cooperation with the Philippine National Police, are acting against reports of traders hoarding face masks and selling said item at an overpriced rate. The DTI has also directed its Philippine International Trading Corp. to import 5 million masks from overseas. Medtecs International Corp. Ltd., the sole manufacturer of medical mask in the country, has committed to supply the government through the DTI.Doctors in the Philippines have deplored the shortages in personal protective equipment amid the pandemic, and was even cited as the cause of high infection rate and death rate of healthcare workers in the country. To address this issue, the Philippine government continues to procure and stockpile such equipment, as the pandemic is expected to last until 2021.
According to Health Undersecretary Maria Rosario Vergeire, the country also issued requests for ventilators and respirators that will be used for severe or critical COVID-19 patients, as there are reported shortages of these equipment.
Retail
According to the Philippine Retailers Association, the "total retail environment" saw a decline of 30–50%. SM Investments, the country's largest retailer, saw a decline of 10–20% in domestic sales. Despite the decline, most retail stores that provide essential services, including supermarkets, convenience stores, hardware stores, and pharmacies, remained open across the country to sustain consumers while other establishments at malls closed down. Such retail stores, however, imposed strict social distancing measures with some supermarkets only allowing 50 customers inside at a time and placing stickers on the floor to indicate that customers must stand one meter apart from each other. Stores were also regularly disinfected and customers were required to undergo a temperature check before entering. In the Greater Manila Area, several online grocers continued to operate, but with limited delivery slots. After most industries in the country being closed for two months, many stores in the retail sector are already allowed to open under revised guidelines of eased community quarantines.Panic buying and hoarding became rampant across the country, especially with essential goods such as food and sanitation products. The Philippine Amalgamated Supermarkets Association reported that the purchases of masks, alcohol, and other personal hygiene products in supermarkets across the country had already surged, urging the public against panic buying.
Economic think-tank Fitch Solutions forecasts that the consumer and retail sector, especially non-essential businesses, would be one of the hardest-hit sectors in the Philippines as it loses sales revenue for an entire month due to the Luzon enhanced community quarantine. Fitch Solutions forecasts the household final consumption expenditure for the country in 2020 to expand by 6.7% year-over-year, which was adjusted from a "pre-coronavirus projection" for 2020 of 7% growth year-over-year.
Mall operators across the country, such as Ayala, Megaworld, SM, Robinsons, and Vista, initially shortened the operating hours of its malls to comply with government quarantine measures. While doing so, malls were asked to implement social distancing measures; for example, several malls implemented a "single-seat gap" policy in cinemas, in which moviegoers were required to sit one seat apart from each other. However, most malls in the country have since limited its operations to establishments providing essential services, particularly groceries, banks, and hardware stores.