Post-COVID scenarios

What’s the impact of the Luzon-wide “community quarantine” on our economy? Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno frankly laid down all his cards on the table. An economist by profession and now as chief of the country’s monetary policymakers, Diokno would and could not hazard any guestimates or projections, except perhaps describe it graphically.

Incidentally, Diokno was one of the Philippine government officials who underwent a 14-day “self-quarantine” along with Finance Secretary Carlos Dominguez after they got in close contact with a fellow official who later turned out as infected with coronavirus 2019, or COVID-19 for short. It was the same official event when they were with President Rodrigo Duterte who also had to undergo a COVID test just to make sure they were not infected.

Diokno, Dominguez and President Duterte were subsequently cleared after they turned negative for COVID-19 infection. But in the case of the 74-year old President Duterte, he might take a second testing depending on the outcome on COVID test done to Department of Health (DOH) Secretary Dr. Francisco Duque III. As the chairman of the Inter-Agency Task Force on the Management of Emerging Infectious Disease, Duque got exposed to one of his DOH official who tested positive of COVID-19. Duque went into self-quarantine pending the outcome of his COVID test. 

When no less than the head of the Task Force turned vulnerable to COVID-19 infection, it does not augur well to the on-going enhanced quarantine measures that President Duterte imposed last week all over Luzon. We are on Day 8 of the 30-day period under what President Duterte now frankly calls as “lockdown” of the entire Luzon island.

“The damage to health and society might be manageable. One thing going for us is that the Philippines is a tropical country and an island republic, with thousands of separate islands,” Diokno pointed out.

But with all levels of classes suspended, work reduced to skeletal force in government and private offices, 24-hour home quarantine, and 8 p.m. to 5 a.m. curfew hours imposed upon everyone, checkpoints to enforce the no travel-no movement of people and non-essential goods, etc., what will happen to our economy? “I don’t know yet. But it will definitely have an impact,” Diokno conceded.

Thus, the BSP Governor urged all Filipinos to focus on how to make the Luzon-wide community isolation measure work. 

“The community isolation measure takes the nature of a public good,” the BSP Governor cited.

Undaunted by the statistics of infection and mortality that continue to increase, our doctors, nurses, and the rest of the medical world have not slowed down in trying to contain the spread of the COVID-19 pandemic. Medical and health experts from across the globe are also talking about total efforts “to flatten the curve” of COVID-19 infection.

When the numbers just rise, the graph shows a steep climbing curve that is shaped like going up a mountain. That happened in the first few weeks after the initial outbreak COVID-19 contagion when there were sparse interventions yet by China and the nations affected. This is why, all 114 countries currently with COVID-19 infection have implemented a slew of “lockdown” measures to bring down the pandemic to lowest level and eventually “to flatten the curve” and taper off. 

From the previous Metro Manila coverage of the so-called “community quarantine” version of a “lockdown” imposed here starting last March 15, President Duterte expanded it to the entire Luzon provinces for 30 days and placed under Code Red Sub-Level 2. Travel around the Philippines has been restricted.

And just last week, our Department of Foreign Affairs suspended visa-free entry into our country, especially from COVID-19 infected countries. Airlines, hotels, and other tourism enterprises are hit the hardest and non-essential production lines are also most seriously displaced, not to mention job and income losses of millions of Filipinos. 

If the government’s “Luzon-wide community isolation” measures succeed, Gov. Diokno believes the adverse impact to the Philippine economy will be minimal. “And we can expect a V-shape recovery,” the BSP chief boldly predicts.

He was, of course, using the language of econometrics while he was simply trying to give the picture of how the country’s economy will make a steep dive downward, then recover immediately upward like the shape of letter V.

Though he did not give specific figures, Diokno obviously refer to the 6.4% growth in the gross domestic product (GDP) posted during the 4th quarter (Q4) of 2019. So the immediate impact to the Philippine economy will be measured and seen on the first quarter or Q1 for the three months of this year.

Remember, the COVID-19 contagion reached the Philippine shores during the Chinese Lunar Year celebration towards the last two weeks in January. This was when three tourists from Wuhan, China – that later turned out to be the epicenter of COVID-19 – brought the infection here. Two of them recovered and one of them died here. As of 12 noon Sunday, there were already 380 confirmed COVID-19 cases, with 25 deaths already and 15 recoveries.

If, on the other hand, the “Luzon-wide isolation” measures fail, Diokno candidly forecasts the bleak scenario on the potential adverse impact to our country’s economy. Diokno could only describe the impact “can be large and protracted” before the country’s economy could recover from the enhanced quarantine measures of the government.

“And the recovery can be an elongated U,” Diokno warned. Diokno likened the GDP graph to fall down from high growth level to its lowest point and stay low for a longer period of time. So hopefully all these “whole-nation” efforts to contain the COVID-19 epidemic in our country would “flatten the curve” much earlier, sooner than later.

“Note that this action is meant to be temporary, 30 days at most, and will straddle two quarters – 2 weeks out of 13 weeks in Q1 and another weeks in Q2. It is designed to flatten the incidence curve,” Diokno pointed out. “I’m hopeful that if we all cooperate, stay home and keep the chatter down, we’ll come out of this once-in-a- lifetime crisis stronger and more united as a nation,” he added. 

This early, the Duterte economic managers are preparing a reported amount of P27.1 billion to step up the government spending plans and re-ignite the economic engine. With 1,300 checkpoints placed all over Luzon and more than 10,000 police and military personnel, only desperate criminals would dare ply their nefarious trade like the shabu smugglers.

The “moral of the story,” Diokno added, “Let’s cooperate. Let’s hope the community isolation works. If you have no business going out of your home, stay home.” Amen to that.