By Atty. Junie Go-Soco | Published: November 17, 2020
“The most essential factor to economic recovery is the restoration of confidence.” — Herbert Hoover, American politician, businessman, and engineer, who served as the 31st President of the United States from 1929 to 1933.
Hoover’s administration was unable to alleviate widespread joblessness, homelessness, and hunger in his own country during the early years of the Great Depression.
The Philippine economy is still in recession.
The negative growth in July to September followed a revised 16.9 percent contraction of the economy in the second quarter from a year earlier, according to the Philippine Statistics Authority (PSA).
The Philippines got hit badly in the third quarter. It registered the second-worst quarterly contraction in its economy on record. At 11.5 percent, the third-quarter contraction was slower than the second quarter’s 16.9 percent contraction, but it was still worse than most government projections. It marked the first time in 35 years that its gross domestic product (GDP) contracted for three straight quarters.
While the contraction is happening, the government needs cash and has to secure two more loans worth $880 million from the World Bank in December to support economic recovery and the agriculture sector.
World Bank will soon launch a $600-million loan to the Philippines, promoting competitiveness and enhancing resilience development.
Despite the bleak indicators, Finance Secretary Carlos Dominguez III is confident and hopeful that the Philippine economy will soon recover and go back on track.
In a meeting with President Rodrigo Duterte recently, Dominguez said the country’s experience with COVID-19 the past several months shows that managing risks is the best way to revive the economy.
On the bright side, the Philippine’s net inflow of foreign direct investments (FDI) in August amounted to $637 million, which was 46.9 percent higher compared to the same month last year, the Bangko Sentral ng Pilipinas said on Wednesday.
Agriculture posted a growth of 1.2 percent in the 3rd quarter, while industry and services recorded contractions of 17.2 percent and 10.6 percent, respectively.
The double-digit dip, however, was much sharper than what the market expected.
However, here is a winner in these times.
A study by Cisco, a global technology firm, revealed that local businesses’ digitalization could add as much as $28 billion to the Philippine economy by 2024.
According to Cisco managing director for the Philippines Karrie Ilagan, the additional input could be achieved by small and medium businesses in the next four years if half of the small and medium enterprises shift to being “digital challengers” from “digital indifferent.”
The study results showed that 73 percent of local businesses are currently digital indifferent or companies that are reactive to market changes, and digital efforts do not exist.
However, 26 percent are digital observers or companies whose digital efforts have started, and the remaining 1 percent are digital challengers or companies that have a strategy for the use of digital technologies.
Ilagan said that internet connectivity, the foundation of the digital economy, remains limited in rural areas.
Where available, services can be expensive and of inferior quality.
Ndiamé Diop, World Bank country director for Brunei, Malaysia, Thailand, and the Philippines, said the Philippines’ digital divide remains large, with at least 60 percent of Filipino households having limited Internet access.
The report noted that the Philippines needs to boost internet connectivity, as it requires a digital economy.
“Internet connectivity – the foundation of the digital economy – is limited in rural areas, and where they are available, services are relatively expensive and of weak quality,” added Diop.
The World Bank points out that the Philippines is a “speed lagger,” as the country’s average mobile broadband speed was only a little over half of the global average of 32.01 megabits per second (Mbps) at 16.76 Mbps.
It Must Be Earned
The country has to scramble to recover and avoid a more profound crisis.
These words can guide efforts to achieve economic recovery: Economic recovery must be earned.
And it will be earned by entrepreneurs and small business – Jon Huntman Jr. He is an American businessman, diplomat, and politician who served as the 16th Governor of Utah from 2005 to 2009.