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Economy on the mend but still weak

The Philippine economy has moved out of the intensive care unit to a recovery room. Its full recuperation will now hinge on the pace of the vaccine rollout and the easing of quarantine restrictions that are hampering businesses and preventing people from spending their money.

The economy as expected still shrank 4.2 percent in the first three months of 2021 from the same period last year when the nationwide lockdown virtually froze all business activities starting in March. But some positive data indicate that the economy is on the mend. The economic contraction has slowed down from the previous quarters, although current quarantine rules are limiting the recovery.

The first-quarter gross domestic product figures show where the economy is weakest. The construction sector slumped 24.2 percent while services plunged 38 percent. Millions of Filipinos rely on the jobs generated by the construction and services sectors. The slump in these sectors means fewer jobs were available for construction workers and the service crew and personnel that work in fast-food restaurants, hotels, gas stations, retail outlets, spas and salons, and shopping malls.

The country’s economic managers noted that the first-quarter performance was constrained by lockdown rules to curb the spread of COVID-19. They recommended easing the rules in phases to support the economic recovery. Specifically, they favored moving Metro Manila toward the more lenient modified general community quarantine status and allowing families and their children to participate in the economy, and restart face-to-face schooling.

The economy needs the participation of the population to sustain the recovery goal. Consumers are spending less because of the curfew hours and the mobility restrictions in transportation. Millions are still unemployed because of the pandemic and do not have the wherewithal to even buy some of the basic necessities.

Easing the current quarantine restrictions will pave the way for the significant reopening of the economy. Along with an aggressive vaccine rollout program, it will serve as the recipe for economic recovery.

Topics: Economy , COVID-19 , Philippines , quarantine restrictions
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