"We pray the shift would turn out right for the Philippine economy."
"We pray the shift would turn out right for the Philippine economy."
After locking the National Capital Region down for six weeks, the government has revised the quarantine categorization of Metro Manila from ECQ (enhanced community quarantine) to MECQ (modified enhanced community quarantine) to GCQ (general community quarantine), with effect from June 1. Some hitherto disallowed industries are now allowed to operate, people can now move more freely (except seniors and minors, who remain locked down at home). Certain categories of public transportation can now go on the streets.
The easing of Metro Manila’s quarantine status is a victory for the business community over the scientific community. The public health scientists would have preferred to have Metro Manila, the nation’s largest metropolis, locked down for at least two more weeks, but the businesses appear to have had the ear of President Rodrigo Duterte.
The businessmen’s organizations appear to have convinced Mr. Duterte that the Philippine economy was already badly hurt, that an increasing number of business enterprises were being driven to permanent closure and that an extended lockdown would make it more difficult for the economy to recover speedily.
Mr. Duterte’s acceptance of the COVID-19 Inter-Agency Task Force’s ECQ-to-MECQ-GCQ recommendation for Metro Manila is a calculated risk, considering that the coronavirus is still out there, as shown by the over-500 new infection cases recorded in Metro Manila on May 28. The calculated risk is that the much-desired economic recovery will be disrupted by the second wave of infections that most health scientists fear will materialize later in the year.
The possibility of a second wave of infections is unquestionably the No. 1 factor to consider in any assessment of the success prospects of the economic-recovery effort. It’s not the only factor; there are two other major factors, both economic in character.
The more obvious of the two major economic factors is the adequacy of the government’s fiscal response to the crisis. Considering the current crisis is the worst downturn to hit the world economy since the Great Depression, that response must not only be adequate; it needs to be massive. Millions of workers in all the sectors of the economy – formal and informal – have lost their livelihoods, and hundreds of thousands of business enterprises, almost entirely MSMEs (micro, small and medium enterprises) appear headed for permanent closure. Eighteen million families need financial relief, according to PSA (Philippine Statistical Authority). In such a situation nothing short of an all-out fiscal effort will do. SAP (Social Amelioration Program) clearly has been an inadequate response and will have to be repeated.
The second – and less obvious – economic factor that needs to be considered in an assessment of the success prospects of the economic-recovery strategy is the Filipino people’s preparedness to return to their pre-COVID 19 consumption habits. Are the Filipino people, especially Metro Manilans in the post-ECQ environment, prepared to do all the consumption things they used to do – to malls, see movies, etc. – in pre-COVID 19 times? The answer to this question appears to be No. A well-known opinion survey institution has just found that more than 40 percent of Filipinos are wary about going back to their consumption habits so soon. Considering that consumption spending accounts for close to two-thirds of this country’s GDP (gross domestic product), the combination of social-distancing limitations and reluctance to resume former consumption habits will operate to prevent Filipino consumers from being the driving force behind the about-to-begin economic recovery effort.
All right-minded Filipinos must pray that last week’s calculated risk of replacing MECQ with GCQ will turn out right for the Philippine economy.