HOLY TRINITY UNIVERSITY

Puerto Princesa City

Master in Business Administration ꟾ 201 – Managerial Economics

ESSAY: HOW HAS COVID-19 IMPACTED THE DEMAND AND SUPPLY OF GOODS AND
SERVICES IN THE PHILIPPINES?
By: Joey Albert O. Sabuya

As the COVID-19 pandemic strikes the Philippines, many industries were affected and
struggled. In particular, the health and tourism sectors are the most affected and bombarded
with many challenges this pandemic brings. These different sectors and markets to served
were both challenged economically. One of them faced a demand surplus, while the other
one has a demand shortage. This situation brought several mental and financial effects to all
individuals involved in these sectors and the economy, in general.

The health sector is one of the sectors in the economy that perform an essential role to
ensure the health and safety of the people in the country. This sector was challenged with
high demand from the individuals asking for medical attention due to the infection caused by
COVID-19. However, the supply of medical service practitioners such as doctors, nurses,
and other medical volunteers and facilities does not meet the increasing number of patients
infected by the pandemic. This situation indicates that the rising number of COVID-19
patients and the limited number of health workers are imbalanced, resulting in a high
mortality rate. It is evident from the news that even up to this moment, hospitals in other
parts of the country cannot accommodate the growing number of COVID-19 patients, which
also resulted in not accommodating even the non-COVID patients. Hence, a progressive
economy comes from a healthy workforce. It also translates to the growth of each individual.
However, despite it, how is the economy growing when it is faced with tremendous economic
rescission?

On the other hand, the tourism sector contributes to the country's economic development.
However, due to the risk of the COVID-19 pandemic, many businesses under this sector,
such as accommodations, attractions, restaurants, and the likes, were forced to limit their
carrying capacity and tend to close, which also resulted in the fall of the employment rate.
The demand for this sector was significantly decreasing due to lockdowns and travel bans
imposed by the local authorities to avoid the spread of the COVID-19 virus, but the supply
remained constant. This situation describes the concept of “Ceteris Paribus,” which
means “all other things being constant.” The supply of accommodation, attractions, and
restaurants in the country remained the same, but the demand from foreign and local tourists
decreased due to the COVID-19 pandemic. This represents a negative impact on economic
growth since the employment status and income generation were also affected. How will an
economy survive if one of its primary sources of revenue faced an extreme crisis and
struggled to employ its people?

In summation, it boils down to the idea that when environmental and political aspects of the
economy change, it will significantly embed an extreme impact on it. COVID-19 pandemic is
the product of environmental and political changes, which negatively impacted the demand
and supply of goods and services in the country, particularly in the health and tourism
sectors. It is also evident that there is a substantial increase in health care fees for COVID-
19 and non-COVID-19 patients, which has a double effect on the rise of the unemployment
rate due to the enforcement of lockdowns where people will no longer have the opportunity
to generate income. Nevertheless, in light of this pandemic and its challenges, economic
recovery is underway despite the struggles and suffocations. Industry sectors are being
conditioned to restart and perform their functions as the country's primary source of
economic growth. From the books of Adam Smith, “The Wealth of Nation,” it argued that
the recovery of the economy would not depend on the intervention of the government, thus,
it always in the hand of the buyer and seller to regulate and control the free flow of
transaction in the economy until it reached its equilibrium.
-end.