Economic impact of Covid-19 Part 3: Health or Wealth

By Art Jimenez

Choose: Health or Wealth?

Upon advice, President Rodrigo Duterte chose for us Health. And that’s when our economic wealth started to falter.

But first things first.

“Health” was behind the flurry of recent presidential proclamations: (1) declaring the entire nation in a “state of public health emergency due to Covid-19,” (2) placing Metro Manila under partial “quarantine,” and soon after (3) expanding the lockdown to the entire Luzon Island under the so-called “enhanced community quarantine.”

This bears repeating. Metro Manila consists of 16 prime cities and one municipality and is the national capital region. NCR accounts for 37.5 percent of the country’s gross domestic product (GDP). Luzon, on the other hand, is composed of eight regions of 38 provinces, 72 cities, and 699 towns, with Metro Manila as the NCR.

Seventy-two percent (72%) of our GDP comes from Luzon (including NCR), which currently stands at PhP20 trillion, according to Bangko Sentral Governor Benjamin Diokno.

Meanwhile to the local government units (LGUs) in the Visayas and Mindanao were decentralized the decision to plan and implement their own version of health versus wealth in fighting covid-19. As expected, the LGUs synchronized their own ECQs with the Luzon ECQ.

As a consequence, the negative impact of fighting an invisible enemy on the country’s wealth or economy has assumed national proportions.

In one fell swoop, the ECQ shut down all types of businesses, local and foreign, with a few exceptions centering on food, medicines, and inbound-outbound travel of qualified Filipinos and foreigners. Roads, avenues, expressways, etc. were practically rid of vehicles, thus cleansing our air (good grief!). The skies and the seas resumed their blue colors and aquatic life began to breathe easily again. A great majority of our people stayed at home and made the virus homeless (hopefully) and deterred would-be felons from plying their illicit trade.

With the business closures came the massive de-employment of millions of regular employees in practically all industries and informal workers, such PU drivers, conductors, and even the lowly pedicab drivers.

No one is spared: micro, small, and medium enterprises (MSMEs), which represent more than 95 percent of all registered firms.

But the loudest cries come from the informal sector who operate unlicensed businesses in malls, flea markets, and sidewalks.

Worst hit are the large enterprises with billions of pesos in local and foreign debts parts of which are due in the short-term. Any business disruption, such as the ECQ could imperil not only their cash position but their very solvency as well.

Business firms are not islands unto themselves. They have suppliers of raw materials and intermediate goods (finished products used as raw materials) here and possibly abroad. Though these suppliers are distinct entities, they make up the supply chain on which their principal depends for inputs at the right time at the right price every time.

And as an old adage goes, the supply chain is only as strong as its weakest link.

Unfortunately, in our Health vs. Wealth concern, the principal firm and its supply chain itself have weakened and now the whole thing threatens to fall apart.

Meanwhile, how is our fight for Health faring?

The number of Covd-19 cases breached at 4,000-mark on April 9 and has risen daily to 4,932 as of April 13. Similarly, the number of deaths rose from 124 on April 9 to 242 as of yesterday while those who recovered numbered 203 on April 9 and 315 as of the same date.

Instead of the curve flattening, it is still rising.

There are voices that plead, ease up on ECQ and open up the economy even a little.

They got their answer. Just a few days ago, President Duterte extended ECQ in Luzon to April 30 and most LGUs have followed suit.

-To be Continued-