By Beatrice M. Laforga, Reporter
MORE than half of companies in the Philippines are uncertain they can recover from the ongoing crisis, according to a survey on the impact of the coronavirus disease 2019 (COVID-19) on enterprises.
Asian Development Bank (ADB) Country Director for the Philippines Kelly Bird told BusinessWorld the survey, conducted together with the Finance department (DoF), showed 51% of the companies were still unsure of recovery, while 30% said they may need around six months to bounce back.
Only 18.6% of firms surveyed were optimistic that “they would fully recover within three months post-ECQ (enhanced community quarantine),” he said in an e-mail on Tuesday.
“One-third of enterprises said they have immediate cash flow problems, which puts them at risk of not surviving (some of these firms will adjust and survive),” Mr. Bird said, citing a survey of 2,481 enterprises in the Philippines conducted in May.
In his presentation before the Nordic Chamber of Commerce of the Philippines, Inc. last week, Mr. Bird said around two-thirds of the companies surveyed suspended operations in April and May. More than half of the firms either temporarily stopped wage payments for their employees or have “reduced payments with hours of work,” during the lockdown.
The government in mid-March placed Luzon, which accounts for over 70% of gross domestic product, under an ECQ that halted nearly all economic activity and domestic consumption.
The ADB-DoF conducted the survey of enterprises to assess the impact of the coronavirus pandemic on their operations at the height of the lockdown in April and May.
Majority or 48% of the respondents were based in Metro Manila. Of the total, Mr. Bird said 52% were micro businesses, 27% were small firms, 13% were medium-sized companies and 8% were large enterprises.
“The enterprises were broadly representative of the industrial structure with 35% in wholesale, retail, accommodation and food services, 10.5% in manufacturing, 9% in construction etc,” he added.
The complete results of the survey will be published within the month.
Lockdown restrictions in most areas including Metro Manila has been eased, with many businesses allowed to reopen but at limited capacity.
However, the number of COVID-19 infections continue to rise. The Health department reported 1,951 additional cases on Tuesday, bringing the tally to 70,764. The death toll is now at 1,837.
With severe slowdown in the domestic economy and widespread business closures, Mr. Bird said the ADB projected the unemployment rate to hit 22% in the second quarter for the Luzon island alone.
“ADB is projecting unemployment in Luzon will peak around 22% in the June quarter and steadily decline as the economy gradually opens. We project unemployment at 12% in Q4 of 2020 and 9.0% by Q2 of 2021,” he said.
The latest Labor Force Survey showed unemployment rate surged 17.7% in April from the 5.1% recorded in the same month last year, or equivalent to a total of 7.25 million jobless Filipinos that month compared to the 2.27 million in April 2019.
“We won’t see a return to pre-COVID unemployment rates until 2022. This is because employment recovery lags economic recovery,” Mr. Bird said.
The multilateral bank also sees five million Filipinos will be pushed below the poverty line this year.
ADB’s baseline projection for the Philippine economy is a 3.8% contraction for full-year 2020, or settling between -2.3% and -5.3%.
“The employment recovery can be assisted or accelerated through large infrastructure investments, support to small- and medium-sized businesses, and active labor market programs such as reskilling workers and employment facilitation,” he added.