"The damage has been enormous."
"The damage has been enormous."
Of the statistics that the IATF (Inter-Agency Task Force for the Management of Emerging Infectious Diseases) regularly releases to the public, the most important and the most eagerly awaited are the statistics on infections, death and recoveries. These numbers provide a measure of the damage done by the novel coronavirus to the country’s MSME (micro, small and medium enterprises).
The damage has been enormous. The PSA (Philippine Statistics Authority) reported last week that in the second quarter, the Philippine economy contracted by 16.5 percent—the highest quarterly loss in its modern history. During that quarter, the nation's economic powerhouse—NCR (National Capital Region) plus CALABARZON—was under GCQ (general community quarantine) or the more rigorous ECQ (enhanced community quarantine). Public transportation was disallowed, the operation of industries considered non-essential was prohibited ,and a stay-at-home requirement was imposed on all persons except those designated as buyers of basic family needs.
GCQ permitted the renewed operation of some industries, but in the form of limited—and therefore uneconomic—capacities.
Needless to say, the statistics most closely watched is the numbers of infections. In the case of the pandemic, infections mean the transmission of COVID-19 from one person to another; in the case of business operations, infection means transmitting unprofitability from one business establishment to another. Every business establishment is a customer or supplier of goods and/or services. When a business establishment’s operations are rendered unprofitable because of a lockdown or some other cases, it transmits the virus of unprofitability to its suppliers, which then transmit the virus to their own suppliers. In no time at all, one has the economic equivalent of a pandemic, to wit, a recession.
The recent ADB (Asian Development Bank) survey of 2,481 business establishments titled. “The Impact of Covid-19 in Philippine Business,’’ conducted from April 28 to May 15, 2020, found out that 2/3 of the responding establishments closed temporarily, that 29 percent reduced the scale of their operations and that most (78 percent) of the establishments that remained open were operating as 50 percent of capacity or less. That is the economic counterpart of IATF’s information-ratio statistics.
The economic agencies of the government—Department of Trade and Industries (DTI), Department of Finance (DOF) and Department of Budget and Management (DBM) – has yet no counterpart number of IATF’s statistics on recoveries. There may already been recoveries, but with business establishments—especially MSMEs—continuing to struggle with sharply diminished cost flows and uneconomic permissible operating capacities, one has to believe that they are few and far between at this point.
Again, there is no counterpart business figure for IATF’s statistics on death. Thus far, around 3,000 people have died from COVID-19. Considering the extreme difficulty of obtaining reliable data on MSMEs, especially micro and small enterprises, the mortality statistics that will emerge is bound to be a number much, much higher than 2,481.