THE world is no stranger to disease outbreaks. Governments have borne the brunt of stemming the spread of communicable diseases throughout the years. Some of the most disastrous outbreaks that have obliterated huge portions of the world’s population include the Bubonic Plague, the Asian Flu and the Spanish Flu, the last one claiming hundreds of thousands of lives. As the Philippine government continues to wage war against an invisible enemy and to quell the spread of the Covid-19 virus through lockdowns and travel restrictions, the economic impact of the pandemic has left many businesses on the brink of shutting down operations.
In the Philippines, economic projections remain bleak. According to revised estimates of the National Accounts of the Philippines as reported by the Philippine Statistics Authority (PSA), the Philippine economy was projected to have sustained economic blows in 2020 due to the impacts of the pandemic. The country’s gross domestic product was estimated to have contracted by 9.6 percent year-on-year from earlier estimates of -9.5 percent. In another report prepared by HIS Markit, a financial services company, it was detailed that while many economic experts see 2021 as a year of recovery for most markets, the effects of the pandemic, along with the imposition of safety restrictions, will likely be more apparent than real. The sharp rise in Covid-19 cases across the country is seen most likely to account for a more constrained pace of economic recovery in the short term. Although experts consider the positive growth recorded during the last half of the year, the escalating incidences of Covid-19 cases and the imposition of another round of enhanced community quarantine measures in Metro Manila and nearby strategic locations continue to dampen economic outlook this year.
Some of the economic sectors most hit by the contagion include the travel and tourism industries due to safety and health restrictions imposed by the Philippine government.
When the Philippines closed its doors to foreign arrivals in late March last year, the rosy projections of the travel and tourism industries were dashed. In the first seven months of 2020, tourist arrivals dropped by more than 50 percent, as cited in a separate report by the Oxford Business Group.
The hospitality industry suffered a similar fate. Hotels were forced to either halt operations or reshape their business frameworks to cope with dwindling revenues. Some of these companies converted their amenities into Covid-19 research hubs and isolation facilities. Today, they continue to struggle amidst the imposition of community lockdowns.
Not all hope is lost. Although a number of key economic sectors have experienced massive hits from the onset of the health crisis, there are businesses that have risen from the rubble. Such key players come from the food manufacturing sector. As households were forced to stay indoors during the duration of government-imposed lockdowns, they stocked up on their food pile, which consisted mostly of nonperishable goods. However, like most businesses, these firms faced challenges along the way, including issues on food safety and handling, employee training and awareness, incident management, and the need to digitalize operations, among others.
The telecommunications and broadband service industry has recorded growth on the back of the increased necessity for work-from-home arrangements. Although there was a need to boost operations, businesses in this sector were able to stem losses. Meanwhile, demand for appliances and electronics driven by changes in work and home arrangements likewise opened avenues of growth for businesses offering these items.
In the property sector, demand for healthy environment and residences away from areas with high Covid-19 cases provided new opportunities for real estate developers in these areas. Digital service providers, on the other hand, continue to cite good numbers in their financial statements on the back of increased demand for online transactions. Restraints in physical mobility of consumers also accelerated growth within this sector.
Core strengths and adaptive measures
The good performance of the aforementioned businesses can be primarily attributed to the intrinsic need and demand by consumers for their services due to mobility constraints and other effects of the pandemic. However, it is worth noting that these companies are doing well on top of these advantages because they have realized the need to restrategize.
The cataclysmic business impact of the pandemic has urged companies to accelerate their digital transformation. This is particularly true in the case of telecommunications and digital service providers who increasingly find ways to boost their product offerings as consumers expect more. In addition to beefing up their marketing and online portfolio, businesses must fast track the implementation of agile, innovative solutions within the workplace.
Imbibing a change in cultural mindset is also key to streamlining digital transformation.
One core business strength of these industries is that they keep an eye on potential risks. A rigorous assessment of a company’s exposure to risks such as challenges in supply chain management and even those on human resources must be made. This should form part of a bigger incident risk management policy that all businesses should implement not just during the onslaught of the pandemic but also for their future dealings.
In the end, the soundest advice for hurdling past challenges in the new normal is not just to rely on core business strengths but to always find opportunities for growth. While future economic outlook remains uncertain as the pandemic currently affects business operations, companies must continuously look for a ray of hope amidst the rubble, capitalize on their strengths and aim to turn every challenge into avenues for growth and recovery.
Anton Ng is a partner of the Audit & Assurance division of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing firms in the Philippines with 23 Partners and more than 900 staff members. We’d like to hear from you! Tweet us: @GrantThorntonPH, like us on Facebook: P&A Grant Thornton, and email your comments to firstname.lastname@example.org. For more information, visit our website: www.grantthornton.com.ph
As published in The Manila Times, dated 21 April 2021