"Economically speaking, this may be a most difficult year for many of us."
While people are busy complaining about red-tagging, the uncertainties on the availability and quality of COVID-19 vaccines, Congress’ discussion of charter change, and other issues, the government released the economic data for 2020.
As expected, the Philippine economy shrank significantly in 2020. Gross Domestic Product (GDP) growth for the year was negative 9.5 per cent. This is the worst since World War II or 1947 when data started to become available. This decline is even worse than what the country experienced during the time of Ferdinand Marcos and surpassed the World Bank projection of a 6.9 slump as of September 2020.
We all know that this economic recession is primarily caused by the pandemic. However, the government’s inability to effectively handle COVID-19 is also to blame. For one, we have the longest lockdown period in the world. Metro Manila, the center of the country’s economic and public life has been in quarantine since March 15 of last year and it remains under General Community Quarantine (GCQ).
Ten months should have been more than enough for the administration to come up and implement effective measures to even just reduce the pandemic’s effects on the economy and people’s health. But until now, new COVID-19 cases are reported by the thousands and the new and more contagious variant is already in the country.
More and more businesses, big and small, have closed or are closing down resulting in massive unemployment. As of October 2020, an estimated 3.8 million Filipinos were jobless. Moreover, according to the Department of Labor and Employment (DOLE), more than 600,000 Filipino overseas workers have been displaced as of August of last year due to the pandemic. The big bulk of these OFWs has since returned to the country, unemployed. The numbers should be higher by now.
The more than 25 million Filipinos working in the informal economy have been disproportionately affected as well. Many of them, particularly those operating micro-livelihood activities, have stopped because they no longer have any capital to use having been used for the needs of their families.
Thus, it will not be surprising if our middle class has shrunk and the poor have become poorer. Money is scarce and it is difficult to induce spending beyond basic necessities when people feel quite uncertain of what will happen. The natural tendency is for people to become very careful in their expenditures.
With government’s incompetence in handling the pandemic, it is hard to expect investors to put their money in the Philippines especially since the problem is worldwide. Investors are more likely to do business with countries that have displayed effective and efficient measures in addressing COVID-19.
It does not help that prices of basic commodities are soaring. Not a few have been complaining about how a small cabbage now costs more than PhP100.00 and ampalaya is now P200.00 a kilo and eggplant costs almost the same. The prices of seafoods and meat products are also quite prohibitive. Yet, we do not hear of moves by the Department of Trade and Industry (DTI) to address this crucial problem.
How will poor Filipinos cope? What food are they eating now? What opportunities do they have to earn a living while keeping them safe from the virus? How will the country bring investor confidence back?
During the GDP briefing, the Acting Director General of the National Economic and Development Authority (NEDA) was asked about economic stimulus packages, he responded that risk aversion makes economic stimulus useless. I am no economist but my simple mind tells me that an increased government spending on matters that are important may actually reduce risk-aversion among people and investors.
It is also important to emphasize that economic stimulus MUST include assistance to those who have been hit worst by this pandemic—the poor. This is because people need to eat and spend for other basic necessities. An increased economic activity by the poor can stimulate the economy as the money will flow back to and circulate in the market. This will be good for the economy.
Government must also implement steps to increase vaccine confidence among our people. We must hurry to make the most effective and cost-efficient vaccine against COVID-19 available as soon as possible. When people feel and know that they are less at risk, they will feel more confident to go out and engage in economic activities.
Congress must halt efforts to amend the Constitution. There are many pressing issues that legislators need to focus on. We have had economic growth under this very same Constitution which proves that our problem is NOT the Constitution but how the pandemic is being handled. Congress should instead put their minds on how our economically devastated citizens may be helped in this time of widespread hardships. Beyond the urgently needed ayuda, our bright lawmakers should come up with laws on helping our people stand up again.
The present is difficult and the future is bleak.
While our economic managers are upbeat and predict economic recovery this year, other economic organizations are not as optimistic. Last year, the World Bank said that the country will recover later than our neighboring countries.
A major source of funds for the country the remittances of our OFWs will definitely go down because of the more than 600,000 displaced OFWs and slowdown of the economies of other countries. According to Think.ing.com, bank lending has also been lower and investment momentum is stalled. The forecast is that the recession will continue through this year because trends point to weakness across key sectors.
Economically speaking, this may be a most difficult year for many of us. Now more than ever, we should help each other and the government needs to be responsive to people’s needs.
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