​​Liquidity amid Lockdowns: Corporate Performance in the Philippines during the Global Pandemic

In the Philippines, the COVID-19 pandemic resulted in an unprecedented contraction in gross domestic product—the largest decline across Southeast Asian nations. Beginning in March 2020, the government implemented a series of strict lockdowns to mitigate the spread of the virus. However, these measures led to prolonged disruptions in economic activity and, at the corporate level, declines in revenues, establishment closures, and mass layoffs. We analyzed the impact of the pandemic on corporate performance and employment using a unique dataset for the Philippines that combines firm-level financial data, establishment‑level employment data, and business restrictions data defined for each industry‑province‑year combination. We constructed a panel of around 2,500 firms and 3,900 establishments covering the period 2018–2022. Using firm fixed-effects regression, we found that mandatory business closures had a large negative impact on corporate revenues, with a full‑year closure resulting in a 65.0‑percent reduction in annual revenues, or a 5.4‑percent reduction for each month of closure. For liquidity‑constrained firms, the decline is larger in magnitude, suggesting that the lack of liquidity impairs a firm’s ability to cope with the crisis and withstand business closures. While revenues began to recover in 2022, lingering adverse effects on profitability and employment remain. Finally, we found that the pandemic had a limited adverse impact on firms’ financial positions.