The economy’s slump in 2020 is not unexpected. With COVID-19 restricting travel and the movement of people, and forcing the closure of many business establishments, the economy contracted by 9.5 percent for the full of 2020.
The partial reopening of the economy obviously is not enough to reverse the tide. Fourth-quarter figures show the story of the economy. Construction sank 25.3 percent, other services tumbled 45.2 percent and accommodation and food service activities slumped 42.7 percent. Philippines exports declined 10.5 percent, while imports plunged 18.8 percent”•the telltale signs of reduced economic activities.
The retail and tourism sectors, along with construction, suffered the brunt of the pandemic. With air travel and local border restrictions, hotels and resort facilities cannot operate viably. Many of them are forced to cease operations. The same is true with thousands of retail and fast-food outlets. Office workers that frequent these establishments are nowhere to be found. There is no consumer spending that can fuel the economy.
Acting Economic Planning Secretary Karl Kendrick Chua noted that the prevailing stay-at-home orders on children were also stalling the economic recovery. Parents and their children often visit shopping malls and dine in fast-food restaurants. The absence of this routine has curtailed spending in the economy and is directly contributing to unemployment in the services sector.
A contraction in the economy simply means more jobs are being lost in the pandemic. The United Nations took note of the situation. The UN’s International Labor Organization found that 8.8 percent of global working hours were lost in 2020 compared to the fourth quarter of 2019. The rate is equivalent to 255 million full-time jobs, or “approximately four times greater than the number lost during the 2009 global financial crisis,” according to the ILO.
The key to economic recovery, thus, is the lifting or easing of the virus restrictions that have shuttered many retail outlets, closed down tourism establishments and impaired the mobility of people. Consumer spending should return to open a bottled-up economy.