Republic of the Philippines

Lyceum of the Philippines University – Manila

College of Arts and Sciences

Muralla St, Intramuros, Manila, 1002 Metro Manila

COVID-19 PANDEMIC CASE STUDY: PHILIPPINES

and
Economic losses from COVID-19 cases in the Philippines: a dynamic model of health and
economic policy trade-offs.

In Partial Fulfilment of the Requirements

in Global/International Trade

Submitted by:
Alon, Lance Yngwie L.
Busilan, Reyann S.
Domingo, Zidane
Feliciano, Denzelle Vea C.
Lumakin, Leigh Illa Q.
Tubban, Bianca Erika

Submitted to:
Mr. Zosimo O. Mambrebe
Global/International Trade Professor

July 2022
JOURNAL 1

Introduction

The article “Covid-19 Pandemic Case Study:Philippines” by Rene E. Ofreneo seeks to address a
lone national struggle, disconnected or unconnected with the anti Covid-19 operations being
waged by other members of the global community. The Philippines cannot defeat Covid-19
much less restrict its expansion and recurrence. The current health, economic and financial crisis
in the Philippines has highlighted both the Earth’s vulnerability and fragility of its inclusion into
the global economy. The pandemic is worldwide, and the processes of globalization such as
growth of international travel and trade are directly responsible for its spread in the nation. The
Philippine economy has undergone liberalization and globalization. It is an economy that
depends on the remittances of over 10 million overseas Filipino workers. So what assistance can
the Philippines, as a member of the international community, receive in its fight to contain a
Covid-19 caused health and economic crisis? The major trading and economic partners of the
nation are the subject of this brief essay, which explores the challenges and potential outcomes of
obtaining such aid. The possibility of supporting the UN Secretary General Antonio Guterres’
proposal for a new social contract in the control of the global system is discussed as the paper’s
probable conclusion.

Methodology

The context of the study is about the different rationale why the Philippines experienced an
economic, financial and health crisis in pandemic due to poor pandemic response by the
government. The study that the researcher used in the chosen study by the researcher is a
Qualitative Case Study because the researcher Dr. Rene E. Ofreneo collected multiple sources of
evidence throughout the phenomenom, and data using a range of quantitative. Dr. Rene E.
Ofreneo obtained data from different sources on range of perspectives and why there was an
health, economic and financial crisis in the Philippines since the ECQ was imposed. It is a
qualitative research for the reason that it has a textual analysis. Dr. Rene E. Ofreneo emphasizes
the situation in the Philippines economic downfall.

Analysis

The COVID 19 Pandemic had been severely damaged the economy of the Philippines due to
negligence of the government as stated in the book by Rene E. Ofreneo titled ‘’ COVID-19
PANDEMIC CASE STUDY: PHILIPPINES’’. The lockdown locked out businesses and
livelihoods, directly disrupting the lives and welfare of the majority. Those dependent on the
economy’s life-savers – overseas employment and call centre-BPO sector – have also been
affected. The fast-growing service industries, such as retail/distribution, education, tourism,
entertainment, real state, were all severely disrupted by the ECQ/MECQ/GCQ/MECQ (Ofreneo,
n.d.). Not only in the Philippines the economy weakened, all countries were affected due to
lockdowns and limited movement of people due to the virus. When the government imposed
lockdown or the ECQ (Enhanced community lockdown) this immobilizes and weakens the
economy of the country, causing number of people in the Philippines where it is in effect.
another rationale why the economy of the Philippines slow down because they did not impose a
travel ban when the COVID19 initial case in the Philippine was discovered towards the end of
January, but the administration did not take any action. up until the middle of March, announce
the ECQ. The government acted late on the threat of the pandemic. Our health sectors in the
Philippines are also the problem due to corruption, shortage of hospitals and equipments as well
as healthcare workers. In his report (April 2020) to the bank's Board of Directors, the President
of the Asian Development Bank (ADB) discussed the Philippines' very constrained "treatment
capacity" for Covid-19 patients. The negligence of our government had caused a huge debt
borrowed by the Philippines in the World Bank.

Interpretation

Rebuilding the Health Sector and Economy:

The Philippines' public health system and economy have been exposed by Covid-19. The crisis
provides an opportunity for the country to rebalance its policies in order to rebuild the health
sector and transform the economy.

The rebuilding of the health sector is clearly related to a bigger societal challenge: Restoring the
public sector's ability to provide the people with the public services they require, primary among
these being health care and social protection in Covid-19 and non-Covid-19 times. Rebuilding
the public sector also means refocusing infrastructure development to help underprivileged areas
be renovated, upgraded, and retrofitted.

In addition to infrastructure development, community reconstruction should prioritize the

establishment of a primary healthcare system in each community, as described in the WHO
Declaration on Health for All from Alma-Ata. The primary healthcare system can serve as the
foundation for resiliency building at the community level in holistic manner, which calls for
integrating health, economic, and environmental concerns. The community health system is the
foundation of a stronger community, as stated in the Alma-Ata Declaration.

In terms of the economy, the question is how to lessen reliance on the two legs: OFW
remittances and the call center-BPO industry. Given the shifting global economic environment
and realities in the Philippines, reliance on these two legs cannot move forward.

The growth of the domestic market as a base for expansion and development is a crucial goal. A
large population of 110 million can sustain the establishment of new industries and jobs, such as
one that produces the materials required to rehabilitate the healthcare system and upgrade and
modernize underprivileged neighborhoods throughout the archipelago. The strengthening of
MSMEs and grassroots entrepreneurs from the informal sector should be a major component of
this rebuilding program.

The greening of the economy is another crucial goal. This implies greening industrial
development (such abandonment of polluting processes and relying on cheap labour as an
investment lure), adopting sustainable agriculture, improving and rehabilitating underprivileged
neighborhoods, and replanting Philippine forests and caring for its natural resources.
In their conclusion, the development plan presented above sounds ambitious. But the problem is
containing COVID-19 and preventing pandemics in the future without returning to the old ways
and instead by building a better present and future.

Evaluation

The Covid-19 pandemic has severely affected the health and economic crisis in the Philippines.
Worth mentioning are the following socioeconomic effects of the crisis: first, the lockdown is an
economic killer. Under the lockdown, the economy shrank drastically and instantly. Economic
planners had initially predicted that the GDP would increase by more than 6% by 2020, but it
actually decreased by 16.5% in the second quarter.

The effects on employment were equally profound and noticeable right away. The national
unemployment rate increased to 17.7% percent in April 2020, the highest level since the end of
World War II, according to the Philippine Statistics Authority. According to statistics,
throughout the first half of 2020, more than seven million workers have been laid off. However,
an independent polling organization, the Social Weather Station, reported a far higher number:
45.5% of adults were unemployed as of July 2020. The corresponding number of Filipino
workers is 27.3 million.

The lockdown seriously disrupted the lives and welfare of the majority by locking out businesses
and livelihoods. People who depend on the industries that are the lifeblood of the economy, such
as call centers and BPOs, have also been impacted. The ECQ/MECQ/GCQ/MECQ disrupted the
fast-growing service industries, including retail/distribution, education, tourism, entertainment,
and real state. Industries focused on exports and domestic sales were both shut down. The micro,
small, and medium businesses (MSMEs) all experienced a severe downturn after the ECQ was
declared in March. Ninety-nine percent of the one million registered businesses in the nation are
MSMEs.

Second,  the fear about a new debt bomb have been triggered by the economy's downfall. The
1980s, 1990s, and 2000s debt crisis in the Philippines served as the basis for the fears. Due to the
financial crisis in 1983–85 (external debt default) and the subsequent “debt penalty” imposed by
the IMF-World Bank group and the Paris Club in 1986–87, these were “lost decades.” The
penalty consist of the neo-liberal "structural adjustment plan" (SAP) of trade-investment
liberalization, which destroyed numerous domestic sectors and continued debt servicing that
consumed a large amount (sometimes over 50%) of the annual national budget.

However, the Philippines survived the "debt penalty" and even managed to produce high growth
rates over the past ten years. There are three interrelated reasons: first, the debt servicing burden
has decreased after decades of dedicated servicing; second, the economy has changed due to the
OFW phenomenon, becoming remittance-dependent;
(more than 10 million Filipinos working abroad remit $3 billion in remittances each month);
third, the growth of the call center-BPO sector as a result of American and European
multinational corporations offshore online customer/business process services.
The Philippines had one of the lowest debt-to-GDP ratios in Asia and the entire globe in 2019:
39.6%. The image of a thriving Philippine economy with a manageable debt stock, however,
suddenly disappeared during the Covid-19. The government's pre-Covid-19 financing plan calls
for approximately P1 trillion ($20 billion) in annual borrowing. The Department of Finance
(DOF)
acknowledged that the pandemic would cause the overall amount of borrowing for the entire year
to triple, amounting to P3 trillion. Because of this, the 39.6% debt-to-GDP ratio that was
recorded at the end of 2019 will now increase to 53.9% at the end of 2020 and to 59.9% in 2022.

Third, the lockdown brought  the informal workers and their communities visible. The pandemic
problematized the Philippine economy with a rising middle class. Instead, the Philippines as an
archipelago of poor communities become visible. The mass media began to regularly feature
images of hungry and helpless poor people scrounging and begging for food and other essentials.

To sum it up, the Covid-19 pandemic is a challenged to the Philippines as a developing country.
Dr. Rene E. Ofreneo highlighted the rationale of the different problems on the response of every
sector of government to this pandemic fails. Thus, the poor pandemic response by the
government impacted severely our economic status. The implementation of ECQ, harsh
lockdown, flattening the curve and the failure of DOH were the major reason on the economic
crisis that the Philippines experienced. The poor health governance headed by Francisco Duque
caused a major problem pertaining also in corruption. The pandemic in the Philippines has a
huge debt again and does not leverage correctly by the government. The pandemic has shown
how badly our healthcare system has worsened and damaged the economy.
Guide to Different Acronyms

Quarantine Programmes:
ECQ – enhanced community quarantine
MECQ – modified enhanced community quarantine GCQ – general community quarantine
MGCQ – modified general community quarantine

Government Line Departments:

WHO – World Health Organization
DOH – Department of Health
DOLE – Department of Labour and Employment
DOF – Department of Finance

Other Acronyms:
GDP – gross domestic product
MSME – micro, small and medium enterprises
IATF – Inter-Agency Task Force on Emerging Diseases NTF – National Task Force on Covid-
19
LGUs – Local Government Units
OFWs – overseas Filipino workers

Reference:
(Ofroneo, n.d.)COVID-19 PANDEMIC CASE STUDY: PHILIPPINES.
https://us.boell.org/sites/default/files/2020-12/20201209-HB-papers-A4-philippines-01_0.pdf
‌
JOURNAL 2
Introduction

The Philippine population of 110 million comprises a relatively young population. On May 22, 2021, the
country had 1,171,403 verified COVID-19 cases, including 55,531 active cases, 1,096,109 who
recovered, and 19,763 who died. As a result of the pandemic, the real gross domestic product (GDP)
dropped by 9.6% year-on-year in 2020—the sharpest decline since the Philippine Statistical Agency
(PSA) started collecting data on annual growth rates in 1946 (Bangko Sentral ng Pilipinas, 2021). To stop
the spread of the COVID-19 pandemic, governments throughout the world-imposed lockdowns and
movement restrictions. As economies gradually reopen, governments must choose between economic
recovery and health policy measure to contain the spread of the virus and guarantee that it does not
overwhelm the health system. The method that we use to conduct this study is through quantitative
research because we will be collecting and analyzing numerical data. The purpose of this study is to
calculate the economic losses caused by illness transmission and various lockdown policies. This is
accomplished by extending the subnational SEIR model to incorporate two differential equations that
quantify economic losses due to COVID-19 infection and the lockdown measures imposed by the
Philippine government. Moreover, with the help of this study, we will be able to find answers on our main
issue: “How does Philippine debts affect international trade during the pandemic?”

Analysis

As a result of the COVID-19 pandemic, governments all over the world were obliged to implement
lockdown procedures and movement limitations to reduce the spread of the virus. As economies begin to
slowly recover, governments are faced with a difficult choice: they must either conduct health policy
measures to prevent the spread of the virus and guarantee that it will not affect the healthcare system, or
they must impose economic recovery measures. They assess the economic losses and health-care
utilization or also known as HCUR for the National Capital Region, Ilocos Region, Western Visayas,
Soccsargen, and for the Davao Region by implementing different forms of lockdown restrictions for a
period of three months to gather one quarter of the economic losses for the following regions. Adding to
that, National Capital Region is responsible for approximately half of the country’s total gross domestic
product (GDP), and the rest of the regions intends to represent other different parts of the nation.

Table 1 below shows the lockdown policies in the Philippines, and it includes Enhanced, Modified
Enhanced, General, and Modified General Community Quarantine.

Lockdown Policy Operational definition

Level IV Restriction on movement and transit, operation of only necessary sectors,
increased presence of uniformed personnel.
Level III Less restrictive movement and transit restrictions; critical, financial, office,
and non-leisure sectors are functioning; uniformed personnel presence is
decreased.
 Level II Movement is still restricted; all sectors, with the exception of education and
leisure, are operating normally; and there is a less presence of uniformed
people.
Level I There are less restrictions placed on mobility; all sectors are either fully or
partly functioning; and there are fewer uniformed people present.

Table 2 shows the sequence of lockdown for different regions.

Retrieved from: Economic losses from COVID-19 cases in the Philippines: a dynamic model of health
and economic policy trade-offs

The chronology of lockdown measures taken for the National Capital Region is shown in Table 2. Each
lockdown measure is expected to remain in place for one month. For the area, two sets of simulations are
used. The first set implies that the region's health systems capacity (HSC) is 17.99 percent (A), while the
second is 21.93 percent (B). A greater HSC indicates an improvement in testing and isolation measures
for problem areas.

Retrieved from: Economic losses from COVID-19 cases in the Philippines: a dynamic model of health
and economic policy trade-offs
For one quarter, Fig. 2 illustrates the average HCUR as well as the underlying total economic losses for
the two sets of simulations. The biggest loss, at 16.58 percent of the region's yearly GRDP, is recorded in
the scenario at 17.99 percent HSC (A), while the lowest loss, at 12.19 percent of its GRDP, is recorded.
Stricter situations, such as Scenario 1, are associated with lower average HCUR scores. Furthermore,
losses and the average HCUR are smaller in the scenarios with 21.93 percent HSC (B). There is a 70
percent threshold for the HCUR, and scenarios 1 to 4 fall below it, with the lowest economic loss
simulated at 9.11 percent of GDP.

Figure 3 shows the simulation for the regions for Ilocos, Western Visayas, Socksargen, and Davao.

Retrieved from: Economic losses from COVID-19 cases in the Philippines: a dynamic model of health
and economic policy trade-offs

Figure 3 shows the simulation for the regions for regions outside NCR. On Table 2 also illustrates
lockdown sequence for Ilocos, Western Visayas, Socksargen, and Davao, and only begins with Level III
and Level I being the lowest lockdown simulated for the areas. In addition, two sets of simulations with
varying health system capacity are conducted for each scenario.

As a result of this lockdown sequence, the panel of the scatter plot shown in Figure 3 depicts the
relationship between the average HCUR and total economic losses expressed as a percentage of the
corresponding GRDP, with both parameters encompassing one quarter. In a manner similar to that of the
NCR, the average HCUR for simulations in which the capacity of the health system is greater (B) is lower
than the average HCUR for simulations in which the capacity of the health system is lower (A). On the
other hand, in contrast to the NCR, the simulations for these locations do not display a parabolic form.

This will help the making of the analysis of the paper because it tackles about the economic losses in the
Philippines due to COVID-19, it will also allow the forthcoming paper to further elaborate and discuss on
how does Philippine debts affect international trade during the pandemic.
Interpretation

In their conclusion, they extended the FASSTER and SEIR model to include two differential equations
that will capture economic losses due to covid-19 infection and to the lockdown measures. The extended
model aims to account for the incurred economic losses due to the rise and fall of the number of covid 19
cases in the country and the implementation of various lockdown measures. After they simulate eight
different scenarios in each of the five selected regions, they found a tight policy decision in the case of
National Capital Region but not the other cases if the four other regions far from NCR. They conclude
that the policy decision in the case of NCR in minimizing the losses given the constraint of the intensive
care unit bed capacity is a difficult decision to be made by the government. On the other hand, regions far
from NCR have wider policy space towards economic reopening and recovery. However, the primary
significance of all scenarios is to improve the health system capacity to control and detect the spread of
the disease remains to be a widen trade-off policy between public health and economic measures.

In their policy trade-off simulations results implies to different policy measures in each region.
Considering that the archipelagic nature of the country and the rise and fall of economic outputs and
covid-19 cases in NCR and other provinces compared to the rest of the country. In each local region the
country merits different policy combinations in economic and health measures will vary on the number if
active COVID-19 cases. Strategic importance of economic activities and output specific in the area and
the geographic spread of their places of work and considering local health system capacities.

Their recommendation suggests that actual number of cases could diverge from the results of their
simulations. This is result of the parameters of the model must be updated regularly due to the behavior of
the population and the likely presence of variants of COVID-19, given the constant variability of the data.
They recommend using a shorter period of the model projections from one to two months at the most.
This study will help us to see the economic and health trade-off that will be useful in analyzing the debt of
the Philippines during the pandemic.

Evaluation

The onslaught of the Coronavirus Disease 2019 (COVID-19) pandemic since 2020 has disrupted
lifestyles and livelihoods as governments restrict mobility and economic activity in their respective
countries. According to (World Bank, 2022), unfortunately, this resulted in -3.36% decrease in the 2020
global economy, pushing 71 million people into extreme poverty (World Bank, 2020;2021). As an
economic phenomenon, pandemics may be categorized as under the typologies of disaster economics.
According to (Benson and Clay, 2004; Noy et al., 2020; Keogh-Brown et al., 2010; 2020; McKibbin and
Fernando, 2020; Verikios et al., 2012), a pandemic’s impacts can be classified according to the following:
(a) direct impacts, where pandemics cause direct labour supply shocks due to mortality and infection; (b)
indirect impacts on productivity, firm revenue, household income, and other welfare effects, and; (c)
macroeconomic impacts of a pandemic. As stated in (Maital and Barzani, 2020; Keogh-Brown et al.,
2010), for most pandemic scenarios, social distancing and different kinds of lockdowns imposed by
countries around the world had led to substantial disruptions in the supply-side of the economy, with
mandatory business closures. Social distancing will have contracted labour supply as well, thus
contributing to contractions in the macroeconomy (Geard et al., 2020; Keogh-Brown et al., 2010).
Moreover, social distancing will also reduce labor supply, adding to macroeconomic downturn (Geard et
al., 2020; Keogh-Brown et al., 2010). In general, the literature indicates that a pandemic has impacts on
both the supply and demand sides, as well as the displacement of labour supply, resulting in reduced
salaries (Genoni et al., 2020; Hupkau et al., 2020; United Nations Development Programme, 2021).
Often, these shocks result from the lockdown measures; thus, a case of a trade-off condition between
economic losses and the number of COVID-19 casualties.

As the COVID-19 pandemic strike down different countries, economic losses and other welfare areas
have been affected due to the health care crisis. As a result of the lockdown and other public preventative
initiatives, they found out that the COVID-19 pandemic resulted to increase in inequalities, and as well as
losses to the welfare and the macroeconomy. Adding to that, public prevention related labor were at most
25% of the total economic losses while health-related losses only included a maximum of 17% of the total
economic losses. On the other hand, the dynamic simulations for the economic impacts of the pandemic
have an advantage compared to the static simulations for the economic impacts of the pandemic because
it estimates the economic losses from the pandemic resulting to have practical insights regarding
policymaking. They use compartmental models that are useful to track down the spread of the virus,
infected people, death roll, and as well as determining appropriate preventative to control the COVID-19
pandemic.

In (Chen, Lee, Sang on their research about The Role of State-Wide Stay-At-Home Policies on confirmed
Covid-19 cases in the United States: A Deterministic SIR Model) Predictive mathematical models for
epidemics are crucial in comprehending the trajectory of an epidemic and plan for effective policy
strategies, particularly through a regional perspective. The SIR model is one of the most common
epidemiological models used to describe human to human transmission through three mutually exclusive
and contiguous states of infection: susceptible (S), infected (I), and recovered (R). Peirlink et al., among
other researchers, have similarly modelled COVID-19 transmission by estimating clinical severity and
forecasts for death rates using the SIR model. The SIR model was chosen for its simplicity, minimal
number of model parameters and its proven ability to outline the epidemiological factors associated with
COVID-19 at the regional scale. The SIR model is particularly well suited in distinguishing important
features and developing insights into public health policy. The parsimonious assumptions used to set up
the SIR model are used to increase generalizability and avoid overfitting on limited and incomplete
datasets. Indeed, according to (Optimal Targeted Lockdowns in a Multi-Group SIR Model Daron
Acemoglu, Victor Chernozhukov, Iván Werning, and Michael D. Whinston), that using the SIR model in
the paper has become a workhorse tool for understanding and combating the COVID-19 pandemic, by
bringing in economic effects and trade-offs that depend on differential risks in the population.
References:

Turpio, Estuar, Sescon, Lubangco, Castillo, Teng, Tamayo, Macalalag, Vedeja. (2022, April 4). Economic
losses from COVID-19 cases in the Philippines: a dynamic model of health and economic policy trade-
offs. Www.Nature.Com.https://www.nature.com/articles/s41599-022-01125-4?
fbclid=IwAR2Yh4Y5IChmvoj_uNu4coWQfUvVDZgptlsV4zHyCy15G-36494sHmVXk94

Chen D, Lee S, Sang J (2020) The role of state-wide stay-at-home policies on confirmed COVID-19 cases
in the United States: a deterministic SIR model. Health Informatics Int J 9(2/3):1–
20. https://doi.org/10.5121/hiij.2020.9301

Acemoglu D, Chernozhukov V, Werning I, Whinston M (2020) Optimal targeted lockdowns of a multi-

group SIR model. In: National Bureau of Economic Research Working Papers. National Bureau of
Economic Research (NBER). https://www.nber.org/system/files/working_papers/w27102/w27102.pdf.