"Treading a tightrope is never easy."
The Philippine economy finally broke five successive quarters of recession. It cranked up in the second quarter of 2021 and looked ready to steamroll for the rest of the year.
But “speed bumps” along the way will likely slow down the economic rebound. The enhanced community quarantine in Metro Manila and other parts of the country is restricting mobility, has shut down major malls and thousands of retail outlets, and taken away millions of jobs. The ECQ as a result is dampening household consumption.
The economy did creditably well in the second quarter of the year, although part of the sharp recovery is attributed to the low base from last year’s comparative period when it shrank 17 percent. Nonetheless, almost all the engines of the economy, save for agriculture, are humming.
The output of the manufacturing sector increased 22.3 percent from April to June, while construction, which quickly generates jobs, jumped 25.7 percent. Public construction expanded 49.7 percent, a followup to the previous quarter’s growth of 25.3 percent, while that of the private sector rose 19.1 percent, a reversal from the last quarter’s contraction of 37.2 percent. The industry and services sectors posted growth of 20.8 percent and 9.6 percent, respectively.
The second-quarter figures have provided the foundation on which the economy can build upon. Unfortunately, the economy will take a hit in the third quarter if authorities keep the ECQ for an extended period. Tight restrictions that include a ban on restaurant dining and an eight-hour curfew are expected to cost the economy about P150 billion a week in lost output.
The country’s economic managers favor a shorter ECQ period to lessen the damage to the economy. For them, the risks from COVID-19 can be managed better through selective lockdowns in lieu of closing large segments of the economy. The Philippines lifted certain quarantine restrictions in the second quarter of the year that enabled the economy to breathe and the health sector to address COVID-19 concerns at the same time.
Treading a tightrope is never easy. But both the economic and health rewards are worth the challenge.