From the Asian tiger to the sick man again?


In 2019, the Philippines was one of the fastest growing economies in the world. It has finally shed its “sick man of Asia” reputation gained during the economic collapse at the end of Ferdinand Marcos’ regime in the mid-1980s. After decades of painstaking reform – not to mention debt repayment under the dictatorship – the country’s economic boom took root in the decade before the pandemic. Posted over 6 percent of average annual growth between 2010 and 2019 (calculated from Philippine Statistics Authority data On GDP growth rates at constant 2018 prices), the Philippines has been described as the following Asian tiger economy.

That was before COVID-19.

The brazen awakening from the pandemic has been that a service- and remittance-led growth model does not work well in a global disease outbreak. The Philippines’ economic growth faltered in 2020 – and entered negative territory for the first time since 1999 – and the country experienced one of the deepest contractions in the Association of Southeast Asian Nations (ASEAN) that year (Figure 1).

Figure 1: GDP growth of selected ASEAN countries

GDP growth for selected ASEAN countries

Source: Asian development prospects

And while the government expects a slight recovery in 2021, Some analysts are concerned About an uncertain and weak recovery, due to the prolonged lockdown of the country and the inability to switch to a more efficient containment strategy. Instead, the Philippines has relied on strict movement restrictions across large sections of the country’s major cities and growth centers every time the spread of COVID-19 threatens to wipe out the country’s health system.

What happened?

How is one of Asia’s fastest growing economies faltering? It would be too simplistic to blame the pandemic for all of this.

First, the economic model of the Philippines itself appears to be more susceptible to disease outbreaks. It is centered around the movement of people, yet tourism, services, and remittance-fueled growth are all vulnerable to a pandemic. closures Low consumer confidence. International travel is down, tourism has ground to a halt, and domestic lockdowns and travel restrictions have crippled the retail, restaurant and hospitality industry. Fortunately, the country’s BPO sector is showing some resilience – however its key markets have been hit hard by the pandemic, forcing the sector to rapidly upskill and adapt. Emerging Opportunities Under the new normal.

Second, dealing with the pandemic has also been a problem. Insurance is useful if it buys time for the country to strengthen health systems and test treatment systems. These are the building blocks for more efficient disease containment. However, if a country fails to strengthen these systems, it wastes the time that lockdown provides for it. This seems to be the case for the Philippines, which made global headlines for the implementation of one The longest shutdown in the world during the pandemic, but failed to flatten the COVID-19 curve.

At the time of writing, the Philippines is once again heading in another direction strict insurance And still trying to rise to a more efficient level containment strategy Amid growing concerns about the delta variant that has spread across Southeast Asia. It appears to be stuck with frequent shutdowns, which are seriously damaging the economy, and are likely to create a negative outlook for future COVID-19 spikes (Figure 2).

Figure 2 shows how the Philippine government has resorted to stricter lockdowns to quell every increase in COVID-19 in the country thus far.

Figure 2: Community Quarantine Systems during the COVID-19 Pandemic, Philippine National Capital Region (NCR)), March 2020 to June 2021

Community Quarantine Regulations during the COVID-19 Pandemic, Philippine National Capital Region (NCR), March 2020 to June 2021

Note: from The most severe restriction of movement to the least severe, the systems are Enhanced Community Quarantine (ECQ), ECQ* (similar to ECQ but with slightly fewer restrictions), Modified Enhanced Community Quarantine (MECQ), MECQ* (similar to MECQ but with slightly fewer restrictions), GCQ* (similar to GCQ but with slightly tighter restrictions), General Community Quarantine (GCQ). Sources: Philippine Department of Health, Rappler, CNN Philippines, ABS CBN News, The Inquirer, Sunstar, PNA, SipodelliNews.

If the delta variable and other potential variables are near-term threats, the lack of effective containment is expected to force the country back into strict mobility restrictions as a last resort. Meanwhile, just Two months of social transfers (help) by the central government during a 16-month shutdown by mid-2021. All this puts more pressure on an already exhausted population suffering a deep recession, job exodus, and long-term risks to Human Development. Supporting low social transfers in the midst of unemployment and increased hunger Compliance with movement restriction policies is also likely to be impaired.

Third, the Philippines has experienced delays in its work vaccination A rollout that was initially hampered by implementation and supply issues, and later affected by a slowdown Vaccine frequency. All of this is likely to delay the recovery in the Philippines.

Kuo Vadis?

There are now many clear lessons from the Philippines experience and from emerging international best practices. In order to achieve a more successful economic recovery, the Philippines must address the following major policy issues:

  • Building a more efficient containment strategy especially against the threat of potential new variants primarily by strengthening the traceability testing system. Based on lessons learned from other countries, trace-and-treat testing systems usually also include comprehensive mass testing strategies to better inform both the public and private sectors of the true status of infection in the population. In addition, integrated mobility databases (not those based on segmented cities) also allow for more effective and timely traceability. This type of detailed and timely data allows the government and the private sector to better coordinate on precise containment strategies that target areas and communities that need assistance because of outbreak risks. And unlike a generalized lockdown, this targeted, data-informed strategy could allow other parts of the economy to remain more open than otherwise.
  • Strengthen the adequacy and transparency of direct social protection in order to provide immediate relief to poor and low-income families already severely affected by the ill-handling of the epidemic. This requires rebalancing the budget in favor of spending on education, health and social protection, rather than an excessive focus on building and construction infrastructure projects. This is also an opportunity to strengthen the social protection system to create a safety net and synchronous database that covers not only the poor but also the vulnerable groups of the low- and middle-income population. The main concern here is to introduce social protection innovations that prevent middle-income Filipinos from sliding into poverty during a pandemic or other crisis.
  • Step up vaccination to cover at least 70 percent of the population as soon as possible, and get more support from the private sector and civil society in order to further improve vaccine rollout. An effective communications campaign should be launched to address hesitancy to receive vaccines, and build on trustworthy institutions (eg academia, the Catholic Church, civil society and some private sector partners) in order to better protect the population against the threat of delta or any other kind that affects society. Filipino. It would also help if parts of the government could stop stirring up politically motivated fear about vaccines, as happened with the dengue vaccine, Dengvaxia, which continues to sow doubts and fears among parts of the world. Population.
  • Create a “Build Back Better” strategy grounded in comprehensive and comprehensive health care. Among other things, such a strategy should a) recognize the critically important role of the private sector and civil society in pandemic response and healthcare sector collaboration, and b) support the pandemic response around permanent investments in institutions and technology that enhance contact tracing (e-platforms) and testing (Laboratory) and universal health care with lower out-of-pocket costs and higher comprehensiveness. The latter requires a more comprehensive, better-funded, and better-governed health insurance system.

As much of ASEAN is holding back the spread of the delta variable, it is critical that the Philippines take these steps to help allay concerns about the country’s preparedness to deal with the new emerging variables, while resetting expectations in favor of reviving its economy. Only then can the Philippines avoid becoming the sick man of Asia again, and return to the rapid and steady growth of the pre-pandemic decade.

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