Philippine Capital Returns to Lockdown as Vaccinations Lag

(Bloomberg) -- The Philippines’ key economic area plunged back into another lockdown for a week starting Monday as the Southeast Asian nation faces its worst coronavirus surge and a slow vaccine rollout.

Metro Manila and the adjacent provinces of Bulacan, Cavite, Laguna and Rizal were placed under enhanced community quarantine or ECQ, the nation’s strictest classification of movement curbs, from March 29 to April 4. A curfew from 6pm to 5am will be imposed during the lockdown.

“Our main objective why we’re closing down again is to make our healthcare system more manageable,” Health Undersecretary Maria Rosario Vergeire said at a virtual briefing Monday. “Our emergency rooms and intensive care units are choking.”

The economic impact of the stay-home order is expected to be minimal as offices and financial markets will be shut on April 1 and for the Easter holiday, presidential spokesman Harry Roque said on Saturday, adding that “drastic threats warrant drastic response.”

The Philippine Stock Exchange kept the shortened trading hours implemented since the early days of the pandemic, while bonds, foreign currency and swap trading hours are unchanged from Dec. 1 when the Bankers Association of the Philippines restored the pre-pandemic schedule.

Philippine stocks swung between gains and losses early Monday, with the benchmark index rising 1.5% as of 11:00 a.m. Monday after falling as much as 1.7%. The impact on the currency was more muted, with the peso holding steady at 48.49 against the dollar.

Recession

The government earlier tightened mobility in the capital and the surrounding provinces for two weeks from March 22 but cases continued to spike, hitting a record 9,808 on Friday. Daily infections have risen more than five times from the start of the year, while the percentage of people testing Covid-19 positive rose to nearly 20% on Sunday from about 7% in January.

The Philippines, which implemented one of the world’s strictest and longest lockdowns last year, suffered its worst-ever recession in 2020, prompting economic managers to push for a sustained reopening and targeted restrictions rather than a hard lockdown. Gross domestic product shrank 9.5% last year and the contraction is expected to persist this quarter.

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The week-long lockdown will likely cut less than 1% from total economic output and can be offset by the impact of the corporate income tax cut signed into law on Friday, Rizal Commercial Banking Corp. economist Michael Ricafort wrote in a note on Sunday.

Infections are rising globally even as countries ramp up vaccinations amid efforts to reopen economies and revive social activities.

In the Philippines, less than a third of the 1.7 million health workers had been inoculated as of March 23, while the country has received more than 1.1 million vaccine doses. About 2 million more from AstraZeneca Plc and Sinovac Biotech Ltd. are expected to arrive in the coming weeks.

The Philippines is behind its Southeast Asian neighbors like Singapore, Indonesia and Malaysia in inoculations, based on World Bank data. The Philippines has administered 0.2 vaccine doses per 100 people as of mid-March, compared to Singapore’s 13.5 doses.

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Stay Home

Similar to the strict lockdown imposed a year ago, residents in affected areas must work from home if they are able and may only leave for essentials, and are barred from holding mass gatherings. Hospitals and health emergency services, manufacturers of medical supplies, farm sector and delivery of food and medicine are allowed to operate as usual.

Malls are shut, except for tenants such as pharmacies, hardware stores, supermarkets and businesses engaged in food delivery and takeout. Businesses trading in other essential goods and services, including media establishments, can operate at up to 50% capacity, while industries including capital markets, finance, telecommunications and airlines are among those that must operate with a skeleton workforce.

Public transport including trains will be allowed to run at limited capacity while priority construction projects can continue. The capital region, with a population of about 13 million, accounts for nearly half of the nation’s total virus cases.

Economic managers will determine the amount of assistance to people in ECQ areas whose work will be affected by the lockdown.

Link to lockdown guidelines

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