The state of Philippine MSMEs after a year of Covid-19

More than a year has passed since Covid-19 broke out. Next month, the Philippines will mark one year since the government put the country under strict quarantine to limit the disease’s spread. This had a catastrophic impact on our economy; gross domestic product (GDP) shrank by 9.5 percent last year, the lowest ever recorded since the government began keeping data on it in 1946. This is particularly disheartening when one considers that the country entered the year strong: GDP growth averaged about 6 percent in 2019 and financial institutions was sound and stable. Our economy was one of the fast-growing in the world for the past 10 years, but Covid-19 changed that and now we’re in a recession.

Our current economic state has exerted massive pressure on micro, small and medium enterprises (MSMEs), which the Philippine Statistics Authority says accounts for 99.5 percent of all businesses in the country and employs more than 5 million workers, or 62 percent of the total. Despite their size as a sector, MSMEs have become extremely vulnerable and face many growth challenges in this difficult time. According to a United Nations Development Program survey, the majority of MSMEs have either shuttered for good, closed temporarily, or reduced its workforce or capacity because of Covid-19 and its restrictions. Given how large the sector is, it would play a crucial role in the country’s economic recovery in the years to come. Never has this sector faced this much pressure to bounce back.