In the Philippines, signs of an economic crisis abound: empty malls, buy-one-get-one-free car deals, and restaurants closing permanently.
With coronavirus cases spiking, the government this week reimposed stricter containment measures on the capital region, which represents about one-third of the nation’s economy. Even when restrictions were loosened in June and July, however, mobility data suggest Filipinos continued to avoid malls and restaurants more than their Southeast Asian peers.
Virus-damped demand is crippling what was once among Asia’s fastest-growing, consumption-led economies. Gross domestic product probably shrank 9.4% in the second quarter, according to a Bloomberg survey of economists ahead of Thursday’s data release.
“The government needs to be able to flatten the curve,” said Nicholas Mapa, senior economist at ING Groep NV in Manila. “Unless it has demonstrably showed that the virus is under control, we won’t be able to get back closer to where we were before.”
Instead, new infections have repeatedly set daily records over the past week as the outbreak in the Philippines has become the second-worst in Southeast Asia. Four out of five Filipinos are afraid of catching the virus, a Social Weather Stations survey showed.
One of them is Roda Cris, 30, an accountant who used to commute an hour each way to her job in Manila’s business district but now works from home. Since March, she has barely left the house other than for necessities like groceries or prescriptions.
“We have four kids under nine years old and a senior citizen undergoing chemotherapy at home —all are very susceptible to the virus,” she said. “It was a conscious decision to stay at home to protect them.”
With consumption making up more than 70% of the Philippine economy, according to the World Bank, that personal sense of caution is having a big impact.
“It’s not just government lockdowns. Voluntary restrictions add pressure on consumer spending,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. “This leaves a big hole.”
Business owners like Rosa Concepcion know the problem well: The lack of foot traffic has kept her from reopening her cafe in a suburban Manila mall. She’s hoping delivery apps can save the business, but competition has stiffened as many shops go online, while consumers hesitate to spend amid a wave of job losses.
“If it were just our capital on the line, we would probably have pulled out already,” but her workers depend on her for their livelihoods, Ms. Concepcion said. “Our outlook is very dismal.”
President Rodrigo R. Duterte is pitching targeted support for pandemic-hit industries and a $160-billion infrastructure program to boost growth. Some $400 million will be set aside to buy vaccines when they become available, while the government said it’s boosting contact tracing and adding isolation facilities to curb the virus’s spread.
Given citizens’ reluctance to venture out, the Philippines may be among the slowest economies in Asia to return to pre-pandemic growth levels, said Makoto Tsuchiya, an economist at Oxford Economics Ltd. “Persistently rising COVID-19 cases raise the risk of an economic relapse,” he said. — Bloomberg