“After almost one year of lockdown – said to be the world’s longest – the economy appeared, at the start of the 2021, to be gradually moving out of the COVID-19 crisis.”
The list of the top business stories of 2021 is dominated by three items: the arrival and spread of COVID-19 and Delta variant, the two ECQ (Enhanced Community Quarantine) lockdowns imposed on the economy – in March to April and August to September, and the Philippine economy’s modest recovery towards the end of the year.
After almost one year of lockdown – said to be the world’s longest – the economy appeared, at the start of the 2021, to be gradually moving out of the COVID-19 crisis. Then the unexpected happened. A virulent variant of COVID-19, christened the Delta variant, appeared on the world scene and made its way to this country. Faced with evidence of the variant’s deadly impact on other countries, the IATF (Inter-Agency Task Force for the Management of Emerging Infectious Diseases) had no choice but to recommend the placement of this country’s most productive regions under ECQ, the most restrictive of the quarantine levels. The March to April ECQ produced the desired results – reductions in infection, hospitalization and mortality rates – but when a second Delta wave occurred in August, an ECQ was once more imposed on the NCR (National Capital Region) and adjacent regions.
With their severe impact on personal contact and mobility, the lockdowns caused a slowdown in the Philippine economy’s march back to growth. Even with the lowness of 2020 base figures, the GDP (gross domestic product) grew by only 4.1 percent and 7.1 percent in this year’s second quarter and third quarter, respectively. Those numbers brought the January-to-September average growth to 4.9 percent, an enormous improvement on 2020’s disastrous 9.6 percent GDP contraction.
The fiscal sector appearing to have been exhausted by the cost of the two pieces of ayuda legislation – the Bayanihan and Bayanihan 2 Acts – the BSP (Bangko Sentral ng Pilipinas) facing the brunt of providing government support for the Philippine economy’s stabilization and recovery. In what has clearly been one of 2021’s most important stories, the Monetary Board maintained the BSP’s key interest rates at historically low levels: the overnight reverse repurchase facility at 2 percent and the overnight deposit at 2 percent and the overnight deposit and lending rates at 1.5 percent and 25 percent, respectively. There doubtless has been reluctance to borrow and lend in a depressed economy, but low-interest funds have been available for borrowing and lending.
Another major economic feature of 2021 has been the steady rise in world petroleum-products prices in the wake of the renewed aggressiveness of the OPEC (Organization of Petroleum Exporting Countries). The aggressiveness has been the result of the growth in demand for oil occasional by the recovery. A supply-caused increase in pork prices joined the petroleum-products price increases in stoking the fire of inflation, causing the CPI (consumer price index) to rise to a November rate of 4.2 per cent.
2021 was the year that saw the end of the pretensions of PhilHealth (Philippine Health Clearance Corporation) to be a well-managed, efficient government corporation. The findings of COA (Commission on Audit), brought into the open in a Senate investigation, showed Philhealth to be grossly mismanaged, riddled with corruption and undeserving of the right to administer this country’s universal health care system.
Another headline-hugging event in 2021 was the investigation, likewise conducted by the Senate, of the highly anomalous grant of P11 billion worth of pandemic-related government, procurements to a highly undercapitalized, suspicion-ridden company – Pharmally Pharmaceutical Corporation – with ties to individuals friendly with Malacañang. The discoveries made by the Senate Blue Ribbon Committee were ugly enough; but the ugliest part of the entire Senate episode was President Duterte’s appearing to be against the investigators and for the investigated.
On the business front, a noteworthy feature of the 2021 Philippine business’ scene was the establishment of the REIT (real estate investment trusts) as a full-fledged part of the Philippine capital market. By the end of the year almost all of the real estate sector biggies – including Ayala Land, Filinvest and Megaworld – had made an IPO (initial public offering) of their REIT’s shares.
The year-end meeting, held in Glasgow, of COP (Conference of the Parties) 26, was filled as possibly the last chance for the members of the international community to prevent the planet from careering towards a climatic disaster. COP 26’s mother organization, the UN International Climate Change Commission, has been less than ecstatic about the outcome of the Conference.
Two other stories that defined 2021 were the initial phase of the 2022 electoral season – the selection and qualification of candidates – and super-typhoon Odette, which cut a wide swath of destruction across Northern Mindanao and Central Visayas.
The economic impact of Odette has now been felt. The impact of next year’s electoral exercise will be felt by the Philippine economy long after May 9, 2022.