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Monday, April 15, 2024

‘Boosting consumer confidence to boost PHL competitiveness’

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RENEWING consumer confidence amid the pandemic is key to improving the country’s competitiveness, which has been dented by poor economic performance amid lockdown protocols.

John Paul Flaminiano, senior economist and associate director at Asian Institute of Management’s Rizalino S. Navarro Policy Center for Competitiveness, said in a recent forum that uncertainties due to the pandemic are preventing the growth in consumption.

This, he explained, can be addressed by restoring consumer confidence. “Consumer confidence is critical for the economy and getting people to spend,” British Chamber of Commerce of the Philippines (BCCP) Executive Director Chris Nelson said for his part.

However, the current situation amid the pandemic-induced lockdown and protocols has been causing uncertainties, which adversely impacted the economy. The economic downturn caused the Philippines to drop by seven slots to 52nd rank in the 2021 Institute for Management Development (IMD) World Competitiveness Ranking.

“One of the most effective ways to encourage consumers to spend beyond the essentials and more on consumer discretionary products is to provide consumer confidence by reducing uncertainties,” Flaminiano explained.

With this, he stressed the need for a “timely and efficient” rollout of the vaccination program. This, he added, can help the service industry, in particular, because many workers from poor households are employed in this sector.

The economist said a proper dissemination of pandemic-related information, apart from enforcing health protocols, is also necessary to lessen the worries of the public while navigating the current situation.

“Credible information and clear direction from the government will also help alleviate the public’s fear in cooperating with government’s pandemic-control policies and provide the public with a more accurate assessment of the risk of reopening the economy,” he explained.

“Economic activities may not fully resume unless the public feels safe enough to go about their normal, even prepandemic routines. This is, especially, in light of the surges coming in some other countries despite their higher level of vaccination rates,” Flaminiano continued.

‘Not surprising’

The BCCP chief said he expected the Philippines’s lower ranking in IMD’s competitiveness index given the major economic slump due to mobility restrictions amid the pandemic.

“I was not surprised. I was expecting this, primarily driven by the fact that, obviously, the GDP [gross domestic product] has declined so sharply and that is a major factor,” he said.

The lockdown measures, Nelson explained, severely damaged the economy because it is driven by service and consumer sectors—both of which were impacted by the pandemic.

Based on IMD’s report, the country’s ranking for economic performance pillar dropped by 13 notches.

It slid to 57th rank from 44th rank, considering the lower position for the following subfactors: domestic economy, international investment, employment and prices. Meanwhile, the country ranked higher for international trade.

To help the economy, Nelson called for the passage of the following economic bills: amendments to Public Service Act (Senate Bill 2094), amendments to Foreign Investments Act (Senate Bill 1156), and amendments to Retail Trade Liberalization Act (Senate Bill 1840). All these were certified as urgent in April.

“When these get passed, we need to do it in a way we are targeting increased foreign direct investment,” he said, noting that lifting restrictions will allow more investments in the country.

Read full article on BusinessMirror

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