Philippines’ coronavirus missteps could make it Asia’s economic ‘laggard’ as recovery seen among region’s slowest
- Over the last decade the Philippines had managed to harness its 109-million strong population to drive forward a consumption-led economy
- But the pandemic has exposed structural weaknesses that an outsourcing boom and remittances from legions of citizens working abroad papered over
Over the last decade the Philippines had managed to throw off its mantle as the “sick man” of Asia, with its 109-million strong population driving a consumption-led economy. An outsourcing boom and remittances from legions of citizens working abroad helped raise incomes and lifted at least 2 million Filipinos out of poverty.
“There’s not much momentum left in this once juggernaut economy,” said Nicholas Mapa, economist at ING Groep NV in Manila. Consumer sentiment is “deep in the red” amid high unemployment and underemployment, he said.
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The economy continued shrinking in the first quarter and is expected to be among the slowest in Asia to recover, leaving lasting scars: even by 2025, output will remain 11.5 per cent below what it would have been if pre-pandemic trends had continued, according to Fitch Solutions Inc.
The Philippines’ handling of the pandemic was hampered by a 1991 law that made city, town and village leaders responsible for the health system. Without uniform guidance, village-level health teams often follow rules set by mayors or chieftains, resulting in a fragmented response to Covid-19.
When Jaypee Sanchez, 33, caught the virus in March, his district’s contact tracer told Sanchez’s close associates that he had tested positive – and asked them to call others they had interacted with.
“Tracing stops with close contacts. It didn’t include establishments I’ve been to,” said Sanchez, who’s from the Manila area. “It’s confusing and sad.”
The situation worsened with the mass return of migrant workers who faced loose quarantine requirements and unreliable Covid-19 testing, even as more contagious variants of the virus took hold. The Philippines has recorded more than 1.1 million Covid-19 cases, the second-most in Southeast Asia.
With infections easing from last month’s record, the government now is opting for more targeted restrictions than the blunt lockdown that closed 75 per cent of the economy last year. Mass transport is operating in a limited capacity, and work in most sectors continues.
This time, “instead of avoiding the risk, we are managing the risk,” Economic Planning Secretary Karl Chua said on Tuesday.
Even with restrictions loosened, however, Filipinos have been the least mobile in Southeast Asia, according to Google data. That is an ominous trend for household consumption, which makes up more than 70 per cent of the economy.
The government is slowly rolling out digital contact tracing and is pinning its hopes on vaccines, with total vaccine deliveries expected to reach 21.8 million doses this quarter.
“It’s critical that the government improves its Covid-19 management,” Ell of Moody’s Analytics said. “The Philippines is still in the thick of the crisis.”