"Authorities should aggressively reopen the economy now before it is too late."
The economic recession in the Philippines will persist for a longer period of time. With limited public transportation and many areas protecting their borders from each other, it is inconceivable to expect economic activities to go back to their pre-COVID-19 levels soon.
The World Bank now sees the economy contracting 6.9 percent this year after averaging a 6.6-percent growth from 2015 to 2019. The latest projection from the bank is worse than its estimate of -1.9 percent in June.
Our economic managers will not likely contest the dire forecast of the World Bank. A visit to a typical shopping mall will show plenty of empty stalls and much fewer people visiting their favorite hangouts. Many department stores are still closed while fast-food restaurants operate on a skeleton staff.
Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand, has suggested assistance to the poor and vulnerable families and micro and small enterprises will help cushion the impact of the pandemic and hasten economic recovery in the Philippines. The Philippines, he says, must act now to reduce the impact and strengthen the recovery.
The government’s several aid programs have somehow helped the poor cope up with the pandemic in the face of reduced economic opportunities. Every peso given to the poor and vulnerable families through social assistance theoretically translates into demand for basic goods and services in local communities. The World Bank says this, in turn, supports micro and small enterprises and the government’s recovery efforts.
The state assistance, however, may not be sustainable. It may impair the government’s finances in the long haul. Economic recovery will hinge largely on a more aggressive reopening. Every single Filipino who is forced to stay home because of limited public transportation will not be able to contribute to consumer spending. Factories and manufacturing companies take their cue on the spending power of the consumers.
Strict quarantine measures that restricted mobility, work-from-home arrangements and closures of workplaces greatly curbed economic activities in the first and second quarters of the year. Authorities, thus, should aggressively reopen the economy now before it is too late.