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The Philippines has been one of the Southeast Asian countries most adversely affected by Covid-19, with a total of 221,000 cases and 3,558 deaths recorded so far.
The nation’s economy has also been adversely affected by the outbreak, with tourism (which accounted for a whopping 12.7% of the country’s GDP in 2018) devastated through Q2 and much of Q1. This trend has been common throughout Southeast Asia, although it is finally beginning to reverse now.
But how has the economy and its businesses performed through the crisis, and what’s the forecast like for the near-term?
Charting GDP in the Philippines from 2016 to 2020
The Philippines ranked as one of the four most prosperous Southeast Asian nations between 2016 and 2019, at least from the perspective of GDP.
Four years ago, for example, the nation recorded GDP growth of 6.9% and was the joint-second fastest growing economy in the region. It came fourth with respective growth of 6.7% and 6.3% in 2017 and 2018, before expanding by an estimated 6% last year.
However, the impact on tourism has triggered a reversal of fortunes in 2020, with the growth forecast for the Philippines currently estimated at -3.8%.
The good news is that positive growth is expected to return in 2021, with a GDP expansion of 6.5% forecast as the nation’s tourism sector finally begins to reopen in Q3 of this year.
These trends have also been observed amongst individual businesses (especially startups) during the Enhanced Community Quarantine (ECQ) in Luzon, which was initially extended by nearly five weeks until May 15th.
This has caused the growth forecast to lower further in line with business revenues and declining financial markets, as household consumption declined markedly and many firms were required to temporarily close for business.
Once again though, this trend is set to reverse gradually through 2021, notwithstanding further COVID outbreaks and localized lockdowns.
How are Businesses Working Through the Crisis and What Does the Future Hold?
Short and medium-term economic growth in the Philippines has also been bolstered by the nation’s reputation as a major player in global imports and exports, even though exports have faltered in recent times and had a slightly adverse impact on growth.
However, renewed investment in manufacturing and industry has left the economy in relatively good stead, allowing for a quick recovery post-Brexit and making the 2021 forecast more than achievable.
Individual businesses are also playing their role in the short-term, primarily by offering flexible and variable work arrangements in a bid to maintain effective social distancing and minimize the risk of a second spike.
In fact, more than 50% of companies provide multiple types of work arrangements in the current climate, with 56% of this number in the process of rolling out an Internet or mobile plan to assist remote employees.
For those that maintain a functional (albeit smaller) on-site presence, there’s also increased support in the form of safe transportation services, lodgings, and meals.
These are measures that other countries could learn from until a coronavirus vaccine has been formally developed, especially if they want to minimize short-term harm and realize optimal growth forecasts for 2021.