A man wears a mask with the name of President Duterte and his election campaign slogan on April 5, 2020, in Quezon city, Metro Manila, Philippines. Photo: AFP / Ezra Acayan / Getty Images

MANILA – The Philippines faces the double whammy of an uncontained Covid-19 outbreak and a collapsing economy, twin crises that the International Monetary Fund says could spark instability in the months ahead.   

Philippine President Rodrigo Duterte had previously imposed one of the world’s longest and strictest coronavirus lockdowns, soldier-enforced measures his government termed “enhanced community quarantine.”

Months later, however, those restrictions have still failed to arrest the nation’s viral outbreak, witnessed in a troubling new spike in infections in recent days after the relaxation of certain lockdown measures.

In a July 8 address, Duterte warned against a rapid reopening of the economy, preferring instead to “go slowly” to ensure infection rates are “within manageable numbers.”

“Because if you open the entire Philippines and thousands upon thousands of new cases would happen, then we are in deep s—. We will really suffer,” said the tough-talking leader.

As of July 8, the Philippines had 50,359 cases and 1,314 Covid-19 related deaths, according to data compiled by Johns Hopkins University. That represents the second-highest caseload and the highest mortality rate in Southeast Asia.

Philippine leader Rodrigo Duterte takes questions while wearing surgical mask on April 8, 2020. Photo: Facebook

At the same time, the country is on course to suffer one of the region’s steepest pandemic-driven economic contractions, a collapse analysts say is attributable in part to the government’s initial response to the outbreak.

In April, the International Monetary Fund had projected 0.6% GDP growth for 2020, a dramatic deceleration from the 6% the Philippines has averaged over the past decade.

Now, the IMF expects the Philippine economy to shrink by as much as -3.6%, representing potentially the worst economic contraction the country has seen since the final years of the Ferdinand Marcos dictatorship in the 1980’s.

“The downward revision to growth forecasts is mostly attributable to larger-than-expected supply disruptions related to Covid-19 and weaker demand in major trading partners,” IMF resident representative in the Philippines Yongzheng Yang told the Philippine media.

The economist warned that the Philippines’ restrictive lockdown had shuttered as much as 75% of domestic economic activity earlier this year, exacting more economic damage than in neighboring countries that opted for less severe social distancing measures.

“We now expect the resolution of Covid-19 to be more gradual and hence the impact of the pandemic on economic growth to be larger and longer than previously anticipated,” Yang said.

“With the latest downgrade of the global outlook, the external environment for the Philippines has also worsened,” Yang added, warning of a double-whammy entailing a domestic slowdown and bleak export outlook.

Shoppers stand apart as social distancing measures amid concerns over the Covid-19 epidemic while queueing outside a supermarket in Manila on March 17, 2020. Photo: AFP/Maria Tan

The deepening economic crisis will disproportionately hit the most vulnerable sectors of the society, raising concerns about future instability and a potential backlash against Duterte.

The IMF has warned that the mounting economic crisis could reverse decades of poverty-reduction gains, saying that the “adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty … since the 1990s.”

Households are becoming more vulnerable with dried up foreign remittances, a major contributor to domestic spending. Overseas Filipino workers (OFWs) sent home some $33.5 billion in 2019, a record high.

As many as 24,000 overseas working Filipinos have already returned home due to lost employment abroad. That number is bound to rise hugely in the months ahead with an estimated 2.2 million Filipinos working abroad before the pandemic.

The shutdown of Chinese-operated online casino businesses, until recently a major driver of economic growth and taxes, particularly in the capital Manila, is adding to the government’s economic and fiscal woes.

As many as 15 Philippine offshore gaming operators (POGOs), including the Macau-based junket operator Suncity Group, have withdrawn from the Philippines due to license renewal concerns.

The Philippine Amusement and Gaming Corporation (PAGCOR) expects the overall number of POGOs to fall by a third, from 60 to 40, by the end of the year.

Analysts say the government needs to step in to fill the widening economic gap. The IMF earlier praised the government’s relief measures, which it said “rightly targeted the health sector, the vulnerable people and affected businesses.”

A young girl wearing a mask as she sits outside her home in Manila. Photo: AFP/Maria Tan

But months into the accelerating crisis, the Duterte administration has not yet finalized a stimulus package to facilitate economic recovery.

Legislators are now deliberating two major packages, including a 1.5 trillion peso (US$30.3 billion) Covid-19 Unemployment Reduction and Economic Stimulus (CURES) and the 1.3 trillion peso ($26.2 billion) Accelerated Recovery and Investment Stimulus for the Economy of the Philippines (ARISE).

The government has warned that some of the proposed recovery packages now before the Philippine Congress are “fiscally unsustainable” in the face of fast-declining revenues. “There’s a lot of negotiations ongoing between the Senate and the House,” Roque said.

In his July 8 address, Duterte criticized the “devil-may-care attitudes” approach of his fellow populists, namely US President Donald Trump and Brazil President Jair Bolsonaro, who has contracted the Covid-19 virus after earlier downplaying the risks

He reiterated that the country “cannot afford really a total epidemic or pandemonium. We are poor, we cannot afford to gamble. We are still grappling with the first wave,” he said in the televised address.

Finance Secretary Carlos Dominguez, however, was quick to clarify that the country doesn’t face a “binary choice” between opening and closing, saying it can strike a balance between economic recovery and public health.

Duterte’s spokesman Harry Roque summed up the government’s dilemma earlier this week, when he said “I don’t think we have other alternatives but to open the economy.

“If we won’t open the economy, we might die not because of the virus but because we have no livelihood.”