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Philippine Economy

Long wait? PH economy could take 10 years to recover

Oct 2, 2021, 5:03 AM
Rose De La Cruz

Rose De La Cruz

Columnist

The economy is beginning to recover from the Covid-19 pandemic but in terms of sustainability—or the persistent growth path at 6 percent or more — “will actually depend on the actions we are dealing with against the virus,” the country’s economic managers said.

WITH the number of infection cases on the continued decline, the government is confident that the economy can recover in 10 years.

Provided that 1) vaccination is ramped up faster, 2) everyone helps in the proper management of the virus, which granular lockdowns have proved effective and 3) efficient and proper use of all government budgetary resources (including those provided by recent laws passed during the pandemic).

Socioeconomic Planning Secretary Karl Kendrick Chua said the granular lockdown piloted in Metro Manila and the more aggressive rollout of vaccines — which includes teenagers 12 and up this October – will enable the economy to grow by 4 to 5 percent this year, albeit lower the previous target of 7 to 9 percent.

P41.4- T losses

Chua recently came up with estimates of the losses from Covid and quarantines on present and future generations is P41.4 trillion based on the data on net present value (NPV) of 2020.

“In 2020, the economy was closed and lost P4.3 trillion. But in the next 10 to 40 years our losses will continue because consumption and investments are not expected to hit their pre pandemic levels in the next 10 years with social distancing still prohibiting companies from operating 100 percent like tourism, amusement, restaurant and public transport,” he said.

“Consequently, the tax revenues will be lower. But we see that by the 10th year there will be a convergence again to pre-pandemic growth path,” he added.

Also, students were unable to have face- to -face classes as many got sick from Covid and non-Covid factors, which has an impact on productivity and wages in the future.

The losses would be felt over the next 10 to 40 years, Chua said.

The economy is beginning to recover but in terms of sustainability—or the persistent growth path at 6 percent or more — “will actually depend on the actions we are dealing with against the virus.”

He said the economic growth last year was negative 17 percent at second quarter, the peak of COVID, but there was gradual but slow recovery. The latest growth rate for second quarter 2021 is now at positive 11.8 percent.

Manufacturing index

The manufacturing index moved from red in 2020 with a deep decline due to strict quarantines, but with the government’s balancing between economy and public health through job creation, there had been a significant improvement of 94 percent in manufacturing index.

This can be gleaned from exports, which though declined year to the negative level, is now seeing great progress.

Imports, owing to the requirements of the Build, Build, Build program is now expanding along with factories and other equipment needed for recovery.

The latest import growth was at positive 24 percent by July 2021, from negative 21 percent in 2020.

Red line

In government spending, from a red line in 2020 declining to as low as P170 billion, capital outlay for infrastructure has risen to P282 billion in the second quarter of 2021. Many believe this would even be higher in the third quarter.

Unemployment last year was at 17.6 percent and is now down to 6.9 percent as of July, but up again in August to 8.1 percent because of the return of NCR to two weeks of lockdown to control the delta variant.

Underemployment went up to 20.9 percent in July triggered by weather disruption in agriculture.

By August with better weather, work in agriculture resumed and reduced underemployment to 14.7 percent, which is lower than previous months.

Job creation, which depends on quarantine restrictions, was green before the lockdowns at 42.5 million employed people but this dropped to 8.7 million with the quarantines and by August has reached a positive 1.7 million jobs resumed for the economy.

Declining cases

He said the declining cases in September 2021 should not be taken to mean that we can ease up completely.

Covid is still there but we have to continue balancing the economy with saving lives and containing the delta variant.

Latest data showed that 69 percent of the economy is still under heightened quarantine (GCQ and Alert Level 4) affecting 23.3 million workers, but with cases on the decline, this is positive news.

He said further easing of quarantine classifications can come in October with more vigorous vaccination programs to ensure faster economic recovery.

Tags: #economy, #economicgrowth, #Covid19, #Covid19response, #governmentspending


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