The Philippine Economy Could Lose P98 Billion and Cut 250,000 Jobs
As COVID-19 continues its spread across borders, its economic impact has become more and more apparent. Travel industries, such as airlines and hotels, have been hit hard, and events continue to be cancelled left and right to prevent the spread of the virus. Supply chains have been disrupted, trade linkages have slowed down, and business travel has practically come to a stop.
The Asian Development Bank’s (ADB) recent analysis “The Economic Impact of the COVID-19 Outbreak on Developing Asia” suggests the global impact could range from $77 billion to $347 billion (0.1 percent to 0.4 percent of global GDP), depending on how the outbreak evolves.
According to ADB, a “moderate” scenario could cost the world economy $156 billion in losses, of which China would account of $103 billion and the rest of developing Asia would account for $22 billion.
The analysis was made by ADB in an effort to help governments mitigate the human and economic impact of the virus. The analysis outlines the best, moderate, and worst case scenarios for select economies and industries.
“These should not be interpreted as predictions that an outbreak will occur but are meant to provide guidance for governments as they consider appropriate responses,” disclosed ADB.
The Philippine Outlook
In the “best-case” scenario for the Philippines, the local economy would lose 0.2 percent of its total GDP, which would amount to $668.93 million (P33.89 billion) in losses. Approximately 87,330 could lose their jobs.
As for the “moderate” scenario, 0.3 percent would be shaved off the total GDP, amounting to $1.29 billion (P65.36 billion), while 129,380 would lose their jobs.
And for the “worst-case” scenario, the Philippine GDP would lose 0.59 percent, about $1.94 billion (P98.29 billion), and 252,130 would lose their jobs.
ADB also outlines an even more drastic alternative, worse than the worst, called the “hypothetical worst-case” scenario, in which the Philippines would lose 1.67 percent of its GDP, costing the country $5.52 billion (P279.67 billion), and 730,100 job cuts.
However, this is still nothing compared to the “best case” scenario for China, where the virus began. ADB suggests that the economic powerhouse could lose $43.89 billion or 0.32 percent of its GDP. It estimates that about 4.49 million Chinese nationals will lose their jobs due to the virus.
Travel Industry Impact
All sectors are feeling the impact of COVID-19, with agriculture expected to lose $41 million, construction to lose $114.61 million, and business and trade to lose $157.66 million in ADB’s best case scenario outlook.
However, the travel industry, particularly transport services and hospitality (hotel and restaurant) services, have been hit particularly hard by COVID-19, with countless flights and hotel bookings canceled across the globe amid rising fears of the virus.
In the best case scenario, the hotel and restaurant industry is expected to lose $205.71 million, while 31,520 hospitality workers could lose their jobs. Meanwhile, the transport industry is expected to lose $149.95 million and cut 15,530 jobs.
Philippine Airlines has already reduced its workforce by 300 due to losses aggravated by the COVID-19 outbreak. Meanwhile, the demand for Filipino cruise ship workers is decreasing, and OFWs about to be deployed to Qatar have had to halt their plans following Qatar’s travel ban on 14 countries, including the Philippines.
Some companies, such as Singapore Airlines and local airline Cebu Pacific, have decided to opt for pay cuts of higher management instead of job cuts to reduce manpower costs and to avoid laying off personnel.