The Philippine economy under the pandemic: From

Asian tiger to sick man again?

Introduction
In 2019, the Philippines was one of the fastest growing economies in
the world. It finally shed its “sick man of Asia” reputation obtained
during the economic collapse towards the end of the Ferdinand Marcos
regime in the mid-1980s. After decades of painstaking reform — not to
mention paying back debts incurred under the dictatorship — the
country’s economic renaissance took root in the decade prior to the
pandemic. Posting over 6 percent average annual growth between
2010 and 2019 (computed from the Philippine Statistics Authority data
on GDP growth rates at constant 2018 prices), the Philippines was
touted as the next Asian tiger economy.
Body
The rude awakening from the pandemic was that a service and
remittances-led growth model doesn’t do too well in a global disease
outbreak. The Philippines’ economic growth faltered in 2020 entering
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).

And while the government forecasts a slight rebound in 2021, some

analysts are concerned over an uncertain and weak recovery, due to
the country’s protracted lockdown and inability to shift to a more
efficient containment strategy. The Philippines has relied instead on
draconian mobility restrictions across large sections of the country’s
key cities and growth hubs every time a COVID-19 surge threatens to
overwhelm the country’s health system.
Reasoning
How does one of the fastest growing economies in Asia falter? It would
be too simplistic to blame this all on the pandemic.

First, the Philippines’ economic model itself appears more vulnerable to

disease outbreak. It is built around the mobility of people, yet tourism,
services, and remittances-fed growth are all vulnerable to pandemic-
induced lockdowns and consumer confidence decline. International
travel plunged, tourism came to a grinding halt, and domestic
lockdowns and mobility restrictions crippled the retail sector,
restaurants, and hospitality industry. Fortunately, the country’s
business process outsourcing (BPO) sector is demonstrating some
resilience yet its main markets have been hit heavily by the pandemic,
forcing the sector to rapidly upskill and adjust to emerging
opportunities under the new normal.

Reality
Pandemic handling was also problematic. Lockdown is useful if it buys a
country time to strengthen health systems and test-trace-treat
systems. These are the building blocks of more efficient containment of
the disease. However, if a country fails to strengthen these systems,
then it squanders the time that lockdown affords it. This seems to be
the case for the Philippines, which made global headlines for
implementing one of the world’s longest lockdowns during the
pandemic, yet failed to flatten its COVID-19 curve.
Reflection
At the time of writing, the Philippines is again headed for another hard
lockdown and it is still trying to graduate to a more efficient
containment strategy amidst rising concerns over the delta variant
which has spread across Southeast Asia. It seems stuck with on-again,
off-again lockdowns, which are severely damaging to the economy, and
will likely create negative expectations for future COVID-19 surges
(Figure 2).

Figure 2 clarifies how the Philippine government resorted to stricter

lockdowns to temper each surge in COVID-19 in the country so far.
Conclusion
As much of ASEAN reels from the spread of the delta variant, it is
critical that the Philippines takes these steps to help allay concerns over
the country’s preparedness to handle new variants emerging, while
also recalibrating expectations in favor of resuscitating 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.

Reference
 The Philippine economy under the pandemic: From Asian tiger
to sick man again? (brookings.edu)