The deterioration of balance sheets of firms and households may lead to tighter lending standards of banks. At the same time, rising risk aversion of investors may significantly drive out capital, which leads to tighter liquidity, limiting the amount of available cash and funds for investment. Foreign portfolio investments have already registered net outflows from the Philippines in the first two months of 2020, a reversal from net inflows in the same period last year. Trade is seen to slow down, with traders relying more on online processing of trade documents to facilitate seamless movement of cargo. The World Trade Organization estimates that world merchandise trade would fall between 13 percent and 32 percent in 2020 alone. Exports from North America and Asia are expected to be hardest hit, with trade from sectors with complex value chains, such as electronics and automotive products, are expected to decline. Agriculture and Fishery With the uncertainty in this health crisis, there may still be a need for the imposition of community quarantines at certain periods, depending on the spread of the virus. This brings to fore the primordial need for food security — that is, food is available, accessible and affordable, and meets the nutritional requirements. Disruptions in agri-food supply chain are expected to persist, particularly in the transport and logistics system of inputs, machineries and equipment, and farm produce. Movement of people involved in the transport of such inputs and products, technicians, and extension workers will also be limited. Further, with the regulated operations of wet markets, supermarkets, and retail food establishments, the increased reliance on online/digital transactions for food commodities is expected to continue, even in the post-ECQ scenario. On the production side, there will be an increased demand for modern agricultural machineries and equipment in lieu of manual labor, given the need to limit movement of people. Innovative technologies on processing and packaging need to keep up with the increased demand for processed food with longer shelf life. This also means that there will be higher demand for raw materials to be used for preserving food, e.g., salt, sugar, vinegar. The pandemic will also cause a shift in consumer preferences for healthier diets, which will increase demand for safe and nutritious food. Health-conscious consumers are selective of the food they eat, preferring to eat fruits and vegetables to boost their immune system against diseases. The expected reduction in tourism and dine-in services will result in reduced demand for agricultural food items from these establishments. The most affected commodities are expected to be the income-elastic food, like meat and high-value cash crops. On the other hand, there may be higher demand for agro-industrial products like rubber (for making gloves and personal protective equipment), fiber (for making masks, etc.), and raw materials for soap and disinfectants.
Western Visayas COVID-19 Regional Recovery Plan Scenarios toward the New Normal 68
