Prema-chandra Athukorala Comment on Rethinking “Economic Fundamentals” in an Era of Global Physical Shocks: Insights from the Philippines Experience with COVID-19

Prema-chandra Athukorala,  Australian National University: At the time of the onset of the COVID-19 pandemic, the economy of the Philippines had strong macroeconomic fundamentals—a decade of robust growth at an average annual rate of 6 percent, low inflation, remarkably low external debt exposure, strong fiscal position, and the highest ever sovereign debt rating—which are commonly identified as prerequisites for facing external economic shocks with comfort. Yet the Philippines has turned out to be one of the worst-hit countries in East Asia from the coronavirus. Its mortality rate (19.9 per million population, at the time of writing this paper) is comparable only to that of Indonesia, and, on average, almost five times that of other countries in the region. The projected growth contraction in 2020 (−8.3 percent) was by far the highest among these countries. The authors set out to examine why this massive growth contraction in GDP occurred against the...