The long-run cost of COVID-19 to present and future generations is P41.4 trillion in 2020 net present value prices. Though the country is not over the hump, cases have been dropping and recoveries are increasing, due to more people being vaccinated. People can now shift from pandemic mode to endemic—living with the virus just like flu.
Socioeconomic Planning Secretary Karl Kendrick Chua projected the long-run cost of COVID (and the quarantines) to present and future generation is P41-4 trillion in 2020 net present value prices. This was arrived at in consultation with Philippine development partner community and think tanks.
“In 2020, the economy fell by 4.3 percent. Over the next 10 to 40 years, it might likely be P37 trillion lower,” Chua addressed the Manila Times 123rd anniversary Wednesday.
This, he said, is because “consumption and investment are likely to be lower in the next 10 years, due to lower demand in sectors that require social distancing such as amusement, tourism, restaurant and public transport, which can operate sustainably at very high capacity or 100 percent.”
“I think it will take a few years before we gradually build up the capacity depending on the confidence level of the people,” he said.
With lower levels of consumption and investment, expectedly tax take will also be lower.
Convergence
“But after the 10th year, the economy is expected to converge to the pre-pandemic growth path. This does not mean we will take 10 years to recover. We will recover to our pre-pandemic level by early 2023 or late 2022. But we will converge to our original growth path, maybe around the 10th year. And this is not very bad. Some countries, they experienced a crisis and it has taken them 20, 30, or even 40 years to recover or some have not. So, we should take this as a good sign that the economy is strong enough to recover,” Chua stressed.
“Workers’ productivity in the next 10 to 40 years will also be lower due to debt, illness, lack of schooling. And this is something that we need to seriously address. Because one year loss of schooling is going to trigger P11 trillion worth of lost productivity over the lifetime of the worker and firms and establishments which hire these young people later,” he added.
He said though lower productivity is in sight, “and we don't want that to happen, if we postpone face-to-face schooling another year then P11 trillion becomes P22 trillion. That is why I'm very hopeful, and we'll work to review the data to see to what extent we can reopen face-to-face schooling soon.”
Strong recovery
He assured that the country can achieve strong recovery in 2021 and 2022 with growth rates of four to five percent this year, and seven to nine percent next year, if we accelerate the vaccination.
He said everyone, who is available and willing, must be vaccinated. “That will help speed up our achievement of our goal.”
He said the government shift6ed to alert levels with a strong possibility of again reducing it to alert level 2 soon. “We hope to allow more children to have a more normal life by going back to school physically, and families also going out. And as we see in the past year and a half, many people, the far majority can take care of themselves. And we limit our lockdowns to local area because the idea is that lockdowns don’t solve the problem, they only postpone a surge.
“What will reduce the surge is our adherence to the PDITR or the Prevent, Detect, Isolate, Treat, and Recover strategy,” he stated.
Reallocating resources
Chua cited the need to review the medium-term budget so that “we can put in more resources, reallocate more resources to areas like education and health and the overall human capital spending to close the gap that was enlarged by the pandemic.”
Chua said merchandise export growth has improved “from big negatives in the same period in 2020, we are seeing double digit growth with exports recovering strongly as the rest of the world recovers from the virus.”
Merchandize import growth – a strong indicator of our capacity to consume and build our infrastructure program – “there are also very strong double-digit growth in 2021. And at this pace, we are seeing significant recovery in both our consumption spending and our capital formation. “
Infra spending
Government spending on infrastructure, or capital outlay, has increased significantly as of the second quarter of 2021 or from P170 billion total spending a year ago to P282 [billion].Preliminary numbers point to a continuous increase in infrastructure spending, one of the biggest contributors to growth in the last five years.
Growth can still be at 4 to 5% in 2021
“In general, I believe that better management of risk in 2021 will allow us to grow by 4 to 5 percent this year, and 7 to 9 percent next year, and returning to our pre-pandemic growth path of 6 to 7 percent in the other years,” he said.
Enabling this growth path are: 1) accelerating the vaccination program, which would help get back to normal life; 2) safely reopening more of the economy while strictly adhering to health protocols and 3) full implementation of the recovery package that are well-enacted and simply needs to be accelerated and given more urgency.
He said 97 percent of the people do not have COVID or are not at high risk of getting COVID And most of those and who have been infected or are not likely to be infected can take care of themselves by following the health standards, Chua said.
Tags: #NEDA, #long-termcostofCOVID, #frompandemictoendemic, #COVID19