When a Pandemic Strikes: Balancing Health and Economy toward Sustainable and Inclusive Recovery

COVID-19 has made it undeniably clear that governance and policy choices in the health sector have come at very high costs to lives and the economy. The pandemic plunged the Philippine economy in 2020 into its most severe contraction in the postwar era, pushing about five million workers out of jobs, eroding three to five years of gains in poverty reduction, and inflicting scars that threaten the economy’s long-term potential for inclusive growth. The pandemic has exacerbated existing inequalities and created new ones. The burden of employment contraction has fallen disproportionately on lower-skilled and less-educated workers. The gaps in access to health care, education, and mobility services—already present during normal times—have further widened between the haves and the have-nots. The health crisis has also hastened workplace digitization and artificial intelligence, but the benefits have been limited for workers with little or no education and those without access to reliable and affordable internet services, particularly the poor. The resulting loss of organizational and information capital, lost years of schooling and hunger impairing human capital, investment foregone due to heightened uncertainty, and rising inequality have scarred the economy. Such scarring weakens the prospects for long-term productivity growth and inclusive economic development. The road to sustained and inclusive recovery demands a strategic and timely deployment of policy tools that will strengthen the public health system and protect livelihoods and the most vulnerable population groups. The goal is to quickly recover to the pre-pandemic levels of employment and income to avoid deeper economic scarring and steer back the economy to its previous high-growth trajectory. Beyond recovery, the policy imperative must be to strengthen the resilience of the health-economy system, enabling it to withstand future health shocks and other challenges, such as those related to climate change.