Pandemic to hasten digitalization of Philippine economy, says World Bank

MANILA, Philippines — The digital transformation of the Philippine economy may be accelerated as the country strives to restart its faltering economy amid the COVID-19 pandemic, the World Bank said.

Speaking during a virtual forum hosted by BusinessWorld yesterday, World Bank lead economist and program leader for the Philippines Souleymane Coulibaly said the Philippines is now increasingly challenged to restart the economy while responding to the health crisis as the government may no longer have the fiscal space to provide economic stimulus if the prevailing lockdown continues.

Coulibaly said that while the emergency cash transfers for poor households and liquidity support for small businesses provided under the Bayanihan to Heal As One Act is important for cushioning the economic impact of the Luzon-wide lockdown, this may not be sustainable for much longer.

The enhanced community quarantine has been extended until May 15 in the National Capital Region and other areas with high risk of transmission of the new coronavirus that causes the COVID-19 disease.

“The government effort to provide income for the poor and vulnerable for two months and secure access of firms to liquidity through Bayanihan To Heal As One Act is important for cushioning the economic impact of the lockdown but the health crisis might take longer to be fully under control and the government might not have the fiscal space to cover income shortfall over a longer period,” said Coulibaly.

He also noted that a longer period of response to the health crisis through restrictions in mobility can deepen the supply and demand shocks.

“On the other hand, the COVID-19 pandemic may also accelerate the movement of the Philippine economy to digitization which, in turn, would improve the aggregate productivity of the Philippine economy over the medium term,” he said.

As workers continue to work from home, Coulibaly said businesses may be forced to leverage technologies in their operations.

Amid the pandemic response, the country will also be forced to improve its health and social security systems.

“So we are in a short term health crisis but we have a long-term opportunity to strengthen the economy,” Coulibaly said.