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No full reopening of the economy

No full reopening of the economy"'We will be in deep sh*t,’ warns Duterte."

 

 

To reopen or not. That is the question hanging like a sword of Damocles over the economy.

Reopening means full-scale operations for nearly all economic activities – industry, especially manufacturing; agriculture (its reopening is a no-brainer since farming and fisheries are done in open fields), commercial, and services.  Services, especially, since it accounts for more than 60 percent of economic production or the annual output of goods and services (GDP, or Gross Domestic Product).

Full resumption of economic activity is what we, normal people, ordinarily would expect, assuming success in a crisis, in this case, the coronavirus crisis.  Indeed, what did the Philippines gain with the lockdown that triggered economic collapse?  The curve was not curved downwards nor flattened at all.

At this writing, July 9, there are now 50,359 COVID-19 cases in the Philippines.  When the current lockdown began on March 15, cases numbered only 140.  That is a stupendous increase of 35,870 percent or 359 times. 

As of July 8, daily COVID cases hit a record 2,486 (in one day).  On March 15, daily cases were only 29. Daily cases rose to a record 2,424 on July 5, only to be eclipsed by new peak on July 8. Between 29 on March 15 and 2,486 on July 9, daily cases reached a stratospheric increase of 8,472 percent, or 86 times. 

Addressing the nation on July 8, Monday, President Duterte, his voice hoarse, said he cannot follow the example of other countries, like the United States (under Donald Trump) and Brazil (under Jair Messias Bolsonaro), and modify the lockdown or “totally open in wild abandon.” “We are still grappling with first wave,” he said.  He wore a green jacket, over a blue dotted shirt, a portable air filter, the size of a big lighter, strung from his neck. He looked fairer than his usual mien.

The President cited the examples like Japan, South Korea, China and the US which opened up “for money to come in” only to see a spike in cases. “We have to be very circumspect in reopening of the economy,” Duterte cautioned. 

“Because if you open the entire Philippines and thousands upon thousands of new cases would happen, then we are in deep s***. Talagang mahirapan tayo. Unang-una wala tayong pera,” the President exclaimed in frustration.

Duterte assured the nation “we were able to stop the rampaging of COVID on its track.”

The best concession to reopening by Duterte is allowing non-essential or tourism travel overseas by domestic Filipinos.  But the conditions for travel could be tough: confirmed return tickets, travel and medical insurance, and undertaking to willingly endure quarantine in the country being visited and again, quarantine upon return to the Philippines.

Still, Finance Secretary Carlos “Sonny” Dominguez III, head of Duterte’s economic team, is for reopening of the economy.   He is clearly worried.  The economy has collapsed.  The world’s strictest and longest lockdown, which has now lasted 116 days at this writing (July 9), in one form or another, has meant economic loss of more than P4 trillion.

Dominguez said that while the people’s health and safety remain the government’s top priority, Filipinos cannot keep retreating from the virus at the cost of their livelihoods, especially in Metro Manila and the Cavite-Laguna Batangas-Rizal-Quezon (Calabarzon) region that collectively account for 67 percent of the domestic economy.

“It is vital that these regions reopen. The reality is that this virus will not go away until a vaccine is found. In the meantime, we must get back to work while staying safe,” Dominguez said during the pre-State of the Nation Address (SONA) forum of the Cabinet’s Economic Development and Infrastructure Clusters (EDIC) held July 8.

The P4 trillion GDP loss is unbearable.  It rendered half of the employed force jobless and half of Filipino families wallowing in poverty and misery.   Before the coronavirus attacked in late January 2020, only 16 of every 100 Filipinos were considered poor.  Three-fourths of businesses shut down.  The remaining fourth that maintained or resumed operations suffered drop in revenues of 50 percent or higher.

The effect has been a recession that began in the second quarter of 2020 with negative GDP growth of 0.2 percent.  Whole year 2020 GDP growth is projected by the Asian Development Bank at -3.8 percent; 6 percent, per former Economic Planning Secretary Ciel Habito.  Before COVID, the forecast for 2020 GDP growth was 6 percent. BizNewsAsia puts GDP growth decline at -8 percent this year.

With poverty incidence at 50 percent, more than 50 million Filipinos are suddenly poor.  They were supposed to be middle class by the end of 2020, without COVID-19, the disease caused by the coronavirus.

On July 8, in Davao City, Dominguez underscored the need to strike a “reasonable balance between safeguarding public health and restarting the economy” as the country continues to grapple with the coronavirus pandemic and work on a quick economic recovery on the back of a healthcare system better equipped to keep community transmission of the contagion under control.

The finance chief stressed that the government will never take the threat posed by the coronavirus disease 2019 (COVID-19) pandemic lightly, as it must continue protecting lives in ways that do not prevent people from earning a living.

“This is a tough decision to make but we need to do this. Revving up the economy essentially means raising consumer and investor confidence, which requires some functional level of interaction among groups and individuals,” he said. “We are asking all Filipinos to cultivate in themselves a renewed sense of confidence through continued vigilance–not out of fear, but with the knowledge that most factors of viral transmission are under our personal control.”

Dominguez said the government remains fully committed to implementing the “Build, Build, Build” infrastructure program with more projects focused in the areas of health, education, housing, and water and sanitation.

It is pursuing bold fiscal and economic reform measures, such as the remaining packages of the Comprehensive Tax Reform Program (CTRP), and the amendments to the Foreign Investments Act, the Retail Trade Liberalization Act, and the Public Service Act.

“Be assured that the Duterte administration will protect our economic gains, support our recovery, strengthen our resilience, and bring us back to the path of inclusive and shared prosperity. This crisis will not diminish our willingness to exercise decisive leadership,” Dominguez said.

“By working together, we will beat this pandemic and come out even stronger than ever,” he added.

The finance secretary noted that Duterte’s early and decisive actions to combat COVID-19 slowed down the spread of the virus instead of allowing it to grow exponentially faster and gave the government time to expand its testing capacity from just around 300 actual tests per day in March to 18,141 average daily tests at the start of this month.

As an indicator for whether a country is doing enough tests, the World Health Organization (WHO) has set a 10 percent positive rate as the benchmark. The Philippines meets this measure, with only 7.4 percent of tests yielding a positive result, Dominguez noted.

More importantly, the Epidemiological Models by the FASSSTER Project in April and the University of the Philippines (UP) COVID-19 Pandemic Response Team as of June 27 have shown that government interventions such as the community quarantines have prevented as much as 1.3 to 3.5 million infections.

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Topics: economy , Gross Domestic Product , COVID-19 , World Health Organization
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