THE Covid-19 pandemic and quarantines are estimated to cost the present and future generations of Filipinos some P41.4 trillion in the long run, a top official of the National Economic and Development Authority (Neda) said.
“Over the past six months, Neda, with assistance from our development partners and attached agencies, has been estimating the total cost of Covid-19 and the quarantines. The present and future costs are estimated at P41.4 trillion in net present value terms. Broken down, in 2020, we lost P4.3 trillion; in the next 10 to 40 years, we estimate that we will lose up to P37 trillion,” Chua said.
Chua added that consumption and investments are likely to be lower in the next 10 years due to the reduced demand in sectors that require social distancing, such as tourism, restaurants and public transportation. Consequently, tax revenues will be lower if businesses cannot operate at 100 percent.
The estimated total loss due to lower consumption is P4.5 trillion. Meanwhile, the loss in private investment and returns in the same period is around P21.3 trillion.
“We expect the economy to converge to the pre-pandemic growth path by the 10th year. While we will recover to the pre-pandemic level by the end of 2022 or early 2023, it will take several more years before we converge to our original growth path,” Chua said.
Another key finding is that workers’ productivity will also be lower due to untimely death, illness and lack of face-to-face schooling. The impact of these on productivity is likely to be permanent over the next 40 years or the average number of years a person is expected to work in his or her lifetime.
Based on the study, the resulting productivity loss in human capital investment and returns is estimated at P15.5 trillion for the next 40 years. Of this amount, P4.5 trillion are losses due to premature deaths, and the loss in productivity from sicknesses and the inability to access treatment from other diseases and illnesses associated with recovery from Covid-19. Moreover, this also accounts for additional healthcare costs associated with these various diseases and sicknesses.
Meanwhile, the remaining P11 trillion represents the reduction in future wages and productivity, as a result of the suspension of face-to-face classes in school year 2020 to 2021, and the lost wages of parents who forgo or reduce work hours to accompany their children in online classes. The loss in future wages is based on the impact of lower quality education from online and other types of distance learning during the pandemic.
According to the Asian Development Bank, every year of lost schooling leads to a 10 percent permanent decrease in future wages. Using US data adjusted for Philippine education levels, Neda estimates that in the Philippines, online and modular learning is only 37 percent as effective as face-to-face learning.
“The one-year school closure cost the economy P230 billion in 2020, and its impact over the next 40 years of the students’ lifetimes in the labor force is estimated at P10.7 trillion,” Chua explained.
To address the impact of the Covid-19 pandemic, Chua underscored the importance of the three pillar strategy—accelerating the vaccination program by expanding vaccination sites and leveraging new technologies, opening the economy safely through localized lockdowns and pilot face-to-face classes, and fully implementing the recovery program, especially the 2021 budget. (PR)