Philippine Economy Might Be Worse Off Than Other ASEAN Countries Hit By COVID-19
Every nation has been hit by the COVID-19 pandemic, but depending on how a nation has dealt with its outbreak, some countries are faring better than others in the aftermath. Unfortunately, the Philippines is not considered among those ranks.
According to the World Bank’s June 2020 Global Economic Prospects publication, the Philippines is one of the harder hit economies in the East Asia and Pacific region. The World Bank predicts that the Philippine gross domestic product growth will shrink by 1.9 percent this year, which is an eight percent downgrade from the January 2020 prediction, one of the largest downgrades in the region.
The only other countries with lower downgrades were the Solomon Islands and Timor-Leste, which went down by more than nine percentage points in the June forecasts.
“We are among the largest downward revision. I think part of the reason is because the Philippines is the first one to impose the very strict community quarantine which basically shut down the economy for almost two months,” said World Bank senior economist Rong Qian. “Other countries are not doing that precisely, as you know that Vietnam was not doing that and they are more focusing on the contact tracing and testing. So that’s explaining a large part of the why the GDP downward revision is large.”
Despite focusing more on mass testing and contract tracing than lockdowns, Vietnam is one of the few countries in Asia that has managed to successfully flatten the curve and restart its economy. Meanwhile, in countries like Indonesia and the Philippines, the worst is yet to come. One of the reasons for the World Bank’s downgrade is the fact that the Philippines’ COVID-19 cases still haven’t peaked or flattened despite the extended time in lockdown.
“Those emerging market or developing economies (EMDE) that have weak health systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit,” said the report, and the Philippines ticks off each item on the list.
However, the World Bank expects the Philippine economy to stabilize by 2021 and grow by 6.2 percent.
While the Philippines will certainly struggle this year, the rest of the world will also trudge alongside it. The global economy is expected to shrink by 5.3 percent in 2020, which will result in the worst global recession since the Great Depression. But unlike the Great Depression, this recession will be felt in almost every corner of the world, proving “how deep, how wide, and how synchronized” this crisis has become.
The poverty index in the Philippines is expected to worsen, as it will in the rest of the world. On average, developed countries are expected to contract more than emerging markets or developing economies (EMDE), but this doesn’t account for the fact that many families in developing economies already skirt the poverty line.
And the impact of the crisis might just make them slide back into the impoverished state they only recently escaped.