Flattened

We don’t know yet if we have managed to flatten the curve through the brutal quarantine measures enforced for a month now. We should be able to scale up testing this week.

What we know is that our economy has been flattened by this pandemic.

DOLE estimates the economy has shed over a million jobs as things stand. That will be a running number as the domestic economy continues to crater.

Our economic managers estimate that our GDP growth this year will be zero to -0.8 percent. Most bank analysts are saying the Philippines will not be able to dodge the global recession like we did during the 2008 financial meltdown.

On the upside, no one says the Philippine economy will dip as much as most of the mature economies. Some of the industrial countries are expected to contract in a major way.  Some of our main trading partners are reeling into deep recession.

Nevertheless, the epidemic has already wiped out all the gains we achieved in bringing down poverty over the past 60 years. The unemployment rate, a determinant of poverty incidence, will likely remain high for a long time.

As things stand, the global economy is expected to fall into the most serious recession since the Great Depression of 1930. If the pandemic keeps economies closed for much longer, and if infections come in waves, no one is ruling out a depression.

To be sure, the recession that has now hit the global economy is more comprehensive than we saw during the Great Depression period. Lockdowns have shut down most economic activities. Supply chains have broken down. Millions of jobs have been destroyed.

Wishful thinking says we will all bounce back instantaneously as soon as the pandemic loses its steam. But too much destruction has happened to even suspect that. Also, the virus might not even go away completely. The pandemic could recur.

It is wishful to think that the post-pandemic recovery will be a V-shaped one – characterized by a steep drop and then an equally steep bounce back. Most economics think that whatever recovery happens will likely be an L-shaped one – a steep drop followed by a long and gradual recovery.

The most optimistic projection for the Philippine economy says we will, through arduous effort, get back to where we were last February in about five years. The less optimistic projections say it will take us ten years to recover all we lost over the last two months.

All the projections assume we will be able to open up the economy by May or June. Depending on how we are able to control the rate of infection, those projections may even be considered optimistic.

There is a discouraging aspect in the reports from areas that have been able to scale up testing: a very high percentage of infected persons are asymptomatic. That means a larger number amongst us could be carriers of the virus. In turn, what that means is a longer period of restrictions on movement might have to be imposed.

By today, we will have 15 testing facilities capable of handling 8,000 tests per day. That is still too low for our population size. But if the rapid tests are well targeted, we should be able to have an estimate of the extent of asymptomatic infections.   

Nothing indicates we could simply lift all restrictions at the end of this month and return to business as usual. Over the next few days, there will be intensive discussions over how restrictions might be modified to accommodate both the demands of public health and the need to restore productivity.

Even if restrictions are modified, the “enhanced” community quarantine could snap back into place at the very first sign of resurgent infections. This virus could continue to lurk for years. We will have to adjust our lives accordingly.

The thinking behind “flattening the curve” is to keep the number of infections from swamping our health system. If the health system collapses in the face of an epidemic, we have no second line of defense. So far, thankfully, our health system has withstood the challenge. We can only keep our fingers crossed.

The uneven distribution of infections will have to be the first consideration in mapping out the first steps toward the new normal. Metro Manila and surrounding provinces account for the huge bulk of infections. Unfortunately, this is also our nation’s economic center of gravity.

It should be easier to consider normalization of, say, the Visayas where infections are few and containable. But it is in normalizing life in the NCR that is key to rebuilding our badly hit economy. This is the Gordian knot our economic managers need to cut.

The first consideration is reflating the domestic economy is food production. This is unfortunately the weakest section of our economy.

Our agricultural logistics system was fragile before the epidemic. When Luzon was locked down, food stocks were trapped in the farms. Our largest corporations and private individuals soon began organizing a massive and impromptu rescue of trapped agricultural produce. This is both to save the farmers from total loss as well as to keep urban consumers fed.

 To assure the population sufficient food stocks, government announced last week the massive importation of food supplies. That may work in the near term. In the new normal we expect in a few weeks, priority ought to be given the modernization of our food logistics.

More than mere recovery, we should think in terms of reconstructing our devastated economy.