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Quarantine has cost economy around P700 billion
Speaking during a virtual media conference hosted by the Foreign Correspondents Association of the Philippines, Chua said these estimates were gained from the results of a recent survey among businesses affected by the enhanced community quarantine still enforced in the country’s main island and other areas with high risk of transmission of the coronavirus disease 2019 or COVID-19.
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Quarantine has cost economy around P700 billion

Czeriza Valencia (The Philippine Star) - May 1, 2020 - 12:00am

MANILA, Philippines — The imposition of the Luzon-wide lockdown has so far cost the economy P700 billion through business closures, supporting the government’s assumption of zero economic growth this year, acting Socioeconomic Planning Secretary Karl Chua said yesterday.

Speaking during a virtual media conference hosted by the Foreign Correspondents Association of the Philippines, Chua said these estimates were gained from the results of a recent survey among businesses affected by the enhanced community quarantine still enforced in the country’s main island and other areas with high risk of transmission of the coronavirus disease 2019 or COVID-19.

“Based on the surveys so far, the effect of COVID primarily because of the quarantine is some P700 billion,” he said.  “Another way of looking at it, as you know, is we are not projecting in general, a positive economic growth for 2020,” he said.

Economic managers have projected that the onslaught of the coronavirus pandemic will diminish the country’s economic growth to between zero and minus one percent as the main island of Luzon accounts for 70 percent of the gross domestic product (GDP).

Chua said the losses incurred by businesses so far as the quarantine remains in place is no longer very far from the estimated P1.1 trillion expected losses from economic output under a zero growth scenario.

“Our base case assumption is growth will be zero. In fact it can be slightly negative. So if GDP right now is P18.6 trillion, and we will not grow by six percent, the loss we are seeing can be P1.1 trillion. And that (P700 billion) is not very far off,” he said.

Estimates of losses to the economy will be updated in the monthly surveys that will be conducted among businesses.

Improvements in business conditions, he said, may be realized as several areas previously under enhanced community quarantine will be reclassified as areas under general community quarantine, its less strict version.

Resumption to work under general community quarantine will be allowed subject to health protocols and physical distancing measures.

Despite the pressures on the economy to reopen under a so-called “new normal,” Chua maintained that the government will prioritize the prevention of the occurrence of a second or third wave of infections in making a decision on lifting or further easing the severe quarantine still in effect in Metro Manila and other high risk areas.

“We would like to recover and sustain that. We don’t want a recovery followed by a sudden collapse again. We already know the regrets of some countries in that respect,” he said.

The government has been borrowing heavily to augment funds for its pandemic response on the health and social front.

Funds have been committed by multilateral banks such as the World Bank and the Asian Development Bank to strengthen the testing and isolation capability of the health sector and fund its massive social amelioration program for 18 million families living in poverty.

Chua said the Philippines remains to be in a good position to secure more funds for its pandemic response because of the country’s good credit rating and fiscal positions.

He noted that even if the country’s debt-to-GDP ratio rises to between 46 percent to 47 percent this year from 41.5 percent in 2019 this will still be “very low and manageable” for the economy.

“We are in a very good position to borrow because our economy is in a very good position and we have the track record. And we have put tax reform as our equity contribution,” he said.

The social amelioration program which provides emergency cash transfers of between P5,000 to P8,000 to poor households is good for only two months but Chua has said the economic team is prepared to look for other sources of funds if the severe community quarantine is extended and workers are prevented from returning to their jobs.

CARL CHUA
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