A city employee disinfects a street while food vendors stand by at an informal settlers area in Manila on March 16, 2021, as the number of new daily cases of Covid-19 surged to the highest level in seven months. Photo: AFP/Ted Aljibe

MANILA – Following a steep contraction last year, the Philippine economy is again in freefall as surging Covid-19 infection rates and a snail-paced vaccination program hamper any recovery.

With more than 10,000 daily infections and Metro-manila accounting for nearly half of those new infections, the government has again imposed strict lockdowns across key economic hubs, which make up close to half of the country’s total economic output.

Ahead of the government’s decision to place 25 million people under lockdown, Philippine President Rodrigo Duterte traveled to his hometown of Davao to celebrate his 76th birthday over the weekend.

Pictures from the former Davao mayor’s birthday party, which allegedly show the laidback president engaging in inappropriate behavior towards a female houseworker, provoked a firestorm of criticism. 

Countless netizens lambasted Duterte’s crass behavior and generalized incompetence in handling the pandemic. The Duterte administration will have to revamp its pandemic strategy or the Philippines’ battered economy could tip over the edge.

Since March 22, the Philippine government tightened social distancing restrictions in the national capital region, where the bulk of the country’s industries are located. Daily infection rates have seen a five-fold increase since the start of the year, with Covid-19 positivity rates reaching a troubling 20% on Sunday from about 7% in January.

During her virtual briefing, Department of Health Undersecretary Maria Rosario Vergeire warned: “Our emergency rooms and intensive care units are choking.”

A policeman wearing a facemask stands guard at a checkpoint on March 25 after the government imposed an enhanced quarantine in Manila Photo: AFP/Ted Aljibe

Ghost towns return

The recently-imposed Enhanced Community Quarantine (ECQ) is the Philippines’ strictest form of lockdown, lasting from March 29 to April 4. There will be a curfew from 6pm to 5am across major cities, with armored vehicles and soldiers with rifles manning checkpoints across major intersections.

Shopping malls have been closed and public transportation is operating at minimum capacity. Only essential industries such as pharmacies, supermarkets and hospitals are open. Mass gatherings are prohibited, as Metro Manila and surrounding cities once again turn into overnight ghost towns.

Even before the latest surge in infections, macroeconomic conditions were already worrying. Inflation reached a two-year high of 4.7% last month, as the government struggled to constrain food price spikes due to supply shocks, including an outbreak of African swine fever.

Meanwhile, the unemployment picture is deteriorating, as the Philippines posted the highest jobless rate in Asia. The latest surveys show that almost one-quarter of Filipinos laid off during the pandemic lockdowns last year have withdrawn from a depressed labor market.

As many as 1.2 million Filipinos are yet to regain employment, with 1.3 million others under-employed.

Massive borrowing pushed up public debt in January to close to US$200 billion (10.3 trillion pesos), the equivalent to 54.5% of gross domestic product (GDP), the highest debt-to-GDP ratio in more than a decade.

Following a near 10% GDP contraction last year, the worst in the region, the World Bank expects the Philippine economy to only grow by 5.5% this year, well below the government’s 6.5% to 7.5% target.

More people, especially in Manila, will fall into poverty. Photo: AFP/Maria Tan

Poverty looms

The new lockdown will only exacerbate the economic crisis, with Presidential Spokesman Harry Roque warning the government “can’t let more people die of hunger and other reasons in our effort to lower Covid-19 cases.”

To combat a further economic downturn and generalized misery, the government is tapping into 23 billion pesos ($475 million) of unused funds from last year’s economic recovery program.

Budget Secretary Wendel Avisado has tried to reassure the public that economic managers are set to meet to discuss “ways forward” to prevent an economic meltdown.

So far, the Philippine government is set to give 1,000 pesos ($21) to more than 20 million individuals affected by the latest lockdown, the budget secretary said.

This paltry assistance will not be enough to prevent millions of Filipino families from falling back into poverty, as pandemic mismanagement wipes out almost a decade of successful developmental gains.

Last week, Moody’s Analytics warned the Philippines is “in a worrisome state” amid a double-spike in both inflation and infection rates.

The main source of concern is the Duterte administration’s poor vaccination strategy, which has made the country vulnerable to a new wave of infections. Even compared to its regional peers, the Philippines is a laggard. 

As of March 23,  less than one-third of 1.7 million Filipino health workers had been inoculated. Indonesia, the other severely affected country in the region, started mass inoculations last December, while the Philippines only started in late-February.

A health worker prepares an AstraZeneca vaccination in Manila on March 30, 2021 after the government imposed a stricter lockdown, as hospitals in the capital struggle to cope with a surge in coronavirus infections. Photo: AFP/Jam Sta Rosa

Limited vaccines

The Philippines’ vaccination rate by mid-March reached only about 0.2 vaccine doses per 100 people, compared with 13.5 doses in Singapore.

“Elevated inflation, a large output gap, a recent resurgence of Covid-19 infections and limited vaccine availability are all reasons for concern,” Moody’s Analytics said.

“Recent reports indicate that the archipelago has so far only received enough vaccines for 1% of the population, with current estimates indicating the population won’t be fully vaccinated until 2023,” the report added.

This week the Philippines received about 1 million doses from AstraZeneca Plc via the World Health Organization and another 1 million from China’s Sinovac Biotech Ltd.

But there is little indication that a vaccination rollout and supplies will be anywhere near enough to achieve a semblance of herd immunity in the coming year. Amid growing desperation, the government has called on the private sector and major conglomerates to secure vaccines for their employees.

“Business people can give these vaccines to their employees, so that the economy will be opened,” Duterte said during a national address on Tuesday, as his government scrambles for vaccines and an effective response to the pandemic.