Virus surge poses threat to Philippine economic recovery

3 weeks ago
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Despite the rising number of coronavirus infections, shoppers still flocked to the Marikina Public Market on March 21. — PHILIPPINE STAR/ MICHAEL VARCAS

By Beatrice M. Laforga, Reporter

THE fresh surge in coronavirus disease 2019 (COVID-19) cases is threatening an already fragile Philippine economic recovery, government officials said.

Malacañang on Sunday announced tighter restrictions in the National Capital Region and the provinces of Bulacan, Cavite, Laguna and Rizal until April 4. (Read related storyDuterte tightens COVID-19 plan amid surge”). New COVID-19 cases stood at 7,757 on Sunday, bringing the total number of active cases to 73,072.

“[This] increases the risk to timely recovery, but still early in the year so we can still manage,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a Viber message on Saturday.

Finance Secretary Carlos G. Dominguez III said the uptrend “is certainly not helping” the economy’s recovery.

Economic managers in recent weeks have pushed to reopen the economy in order to drive recovery and restore jobs. However, this was rejected by President Rodrigo R. Duterte, as the mass vaccination program has yet to pick up pace.

The government is aiming to grow the economy by 6.5-7.6% this year, after the record 9.5% contraction in 2020.

Mr. Chua said this goal is still achievable despite the alarming rise in COVID-19 cases since last week.

For Asian Institute of Management Economist John Paolo R. Rivera, government officials should study the causes of the recent surge in cases before considering the imposition of a strict lockdown once again.

“This is very important because if people are getting infected from their homes and/or offices rather than in restaurants, malls, transportation, or any public area, then imposing restrictions such as lockdown, reduced capacity, reinstated curfew and liquor ban may not work, which only add damages to economic activities that have been slowly recovering. Economic recovery will definitely be hampered again by a wrong intervention because the numbers are interpreted as is,” Mr. Rivera said over the weekend.

Mr. Chua said the National Economic and Development Authority (NEDA), which he heads, is supporting a localized lockdown to slow down the spread of the deadly virus while allowing the rest of the country to continue living.

“We have been in lockdown/quarantine for a year. As a result, 3.2 million people or 23% of NCR (national capital region) people are hungry. There are also 506,000 jobless in NCR. Every day of GCQ (general community quarantine) costs the NCR and adjacent provinces P700 million in wages,” he said.

Meanwhile, Mr. Dominguez said the Department of Finance (DoF) has always pushed for a prudent fiscal response for the government to conserve its resources and prepare for a prolonged battle against COVID-19.

“We will examine all available facts and weigh the knowledgeable opinions from domestic and international sources, to arrive at a recommendation for action,” Mr. Dominguez said on Sunday.

Mr. Rivera said a third and bigger stimulus should help affected households cope during the crisis.

“Studies have indicated the economic recovery is facilitated by handing out stimulus/economic packages (social amelioration program) to the people particularly the poor,” he said.

While the government helps the private sector by reducing the corporate income tax and supporting struggling companies through equity infusion, Mr. Rivera said the state should also provide more supply-side support to households so they can keep their jobs and spend.

“Another round may be effective this time because people go out anyway for whatever reason it is. People are outside. Giving them financial aid will help boost consumption spending and thereby allow money to circulate from consumers to enterprises to consumers (basic circular flow of income),” he added.

For Mr. Chua, government agencies should focus more on spending the remaining funds from the second stimulus package worth P165 billion, and this year’s P4.5-trillion national budget.

Lawmakers earlier proposed a bigger third stimulus worth P420 billion to drive economic growth through another round of cash handouts, subsidies and financial aid to the private sector.

“We hope that the economic managers heed our call that Bayanihan III — essentially an ayuda bill — be certified as urgent. The COVID situation requires a lockdown; an effective lockdown requires ayuda. Ayuda is the key to an effective lockdown policy,” Marikina City Rep. Stella Luz A. Quimbo said in a text message to BusinessWorld. — with inputs from Gillian M. Cortez

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