Accelerating the COVID-19 vaccination rollout, subsidizing booster shots, managing risks better and implementing the economic recovery program will all help the Philippine economy bounce back from the devastating impact of the pandemic.
Economic Planning Secretary Karl Kendrick Chua said even though economic growth contracted in the second quarter last year to as low as 17 percent at the height of the strictest quarantines to curb the further spread of the virus, it gradually recovered and posted an 11.8-percent expansion in the second quarter this year.
Chua added while prospects for the country’s economic recovery remain promising, its sustainability depends on the actions the government takes in dealing with the virus.
“We can get back up to 4 to 5 percent growth this year and 7 to 9 percent next year by doing three important things,” Chua said in an online briefing in Malacañang.
“First is accelerating the vaccination program. By next month (October), this will be opened to the general population and will also include teenagers ages 12 years old and up. This is the most important thing we need to do as soon as the [vaccine] supply comes in. We have seen that our vaccine rollout has been fast, reaching half a million per day at its peak,” Chua said.
The second strategy is better risk management and the safe reopening of the economy. It involves lowering the age restrictions for those allowed to go out to enable more family activities, allowing limited face-to-face schooling in low-risk areas and imposing granular lockdowns in areas with higher risk.
Chua said the final strategy is implementing the economic recovery program that includes the timely use of the 2021 budget by addressing the gaps in education, health and human capital development.
Finance Secretary Carlos Dominguez III believes the government must subsidize COVID-19 booster shots for the entire population in the long run for the economy to recover faster from the five-quarter technical recession it experienced since the first quarter of 2020.
Dominguez said giving booster shots to those fully vaccinated is an investment in Filipino people’s health.
“… Without booster shots, I don’t think the economy can safely open. If we don’t have booster shots, we will have ups and downs in our economic recovery program. So it is really mandatory that we provide vaccines,” Dominguez said.
He said booster shots might get regular budget allocation from the government.
“I cannot say beyond 2022, but I am sure that the succeeding administration will keep that in mind that these vaccines are really insurance and a necessary input now into the economy,” he said.
Early this month, Dominguez said the government was was planning to borrow around P45.3 billion ($900 million) from multilateral agencies—Asian Development Bank, the Asian Infrastructure Investment Bank and the World Bank—to fund the purchase of booster shots against the COVID-19 virus.
Dominguez cited an allocation of P45.3 billion for the procurement of COVID-19 vaccine booster shots under unprogrammed appropriations in the national government’s 2022 National Expenditure Program.
“The NTF, DOH and DoF have initially identified multilateral and bilateral financial institutions as possible sources of funding for this allocation,” Dominguez said.
“In fact, exploratory discussions with the Asian Development Bank, the Asian Infrastructure Investment Bank and the World Bank have been initiated to help determine possible funding sources for additional vaccine requirements in 2022,” he said.
“We expect to execute loan agreements towards the end of the year,” Dominguez said.
Government data showed that foreign financing to fund its COVID-19 response efforts already hit $22.51 billion (equivalent to more than P1.1 trillion).
Cost of pandemic
The pandemic has taken a great toll on the Philippine economy. Chua said the estimated long-run total cost of the COVID-19 pandemic and quarantines for present and future generations of Filipinos is estimated at P41.4 trillion.
Over the past six months, he said the National Economic and Development Authority (NEDA), with assistance from its development partners and attached agencies, has been estimating the total cost of COVID-19 and the quarantines. The present and future costs are estimated at P41.4 trillion in net present value terms.
“Broken down, in 2020, we lost P4.3 trillion; in the next 10 to 40 years, we estimate that we will lose up to P37 trillion,” Chua said.
Chua said consumption and investments were likely to be lower in the next 10 years due to the reduced demand in sectors that require social distancing, such as tourism, restaurants, and public transportation. Consequently, tax revenues will be lower if businesses cannot operate at 100 percent.
According to him, the estimated total loss due to lower consumption is P4.5 trillion. Meanwhile, the loss in private investment and returns in the same period is around P21.3 trillion.
“We expect the economy to converge to the pre-pandemic growth path by the tenth year. While we will recover to the pre-pandemic level by the end of 2022 or early 2023, it will take several more years before we converge to our original growth path,” Chua said.