‘ECQ, Covid, oil prices top recovery threats’


THE reimposition of the Enhanced Community Quarantine (ECQ), a rise in Covid-19 cases, and higher oil prices are the greatest threats to the country’s recovery at this time, according to a local think tank.

In its latest Market Call report, First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Markets Research said this may temper growth projections starting in the third quarter of the year.

This is despite signs of recovery becoming more evident based on May 2021 data. The think tank said these economic indicators were encouraging and signified the economy was on the mend.

“The onset of a new Covid-variant and the likely stricter restrictions that would follow and the approaching ‘ghost month’ have doused some cold water on the equities market and could also trickle into the real economy in Q3 [third quarters],” FMIC-UA&P Capital Markets Research said.

The think tank said data for May such as the 1.4 million jobs created was a good indicator; the national government (NG) expenditures which increased by 29.2 percent also present a good signal. Data showed inflation was at 4.1 percent in June, the slowest for the year.

Manufacturing output registering a whopping 265-percent growth during the period.

“The May economic data do help buoy optimism that the economy has begun to gain traction. NG spending appears to regain momentum, while money growth has been tepid,” the think tank said.

“Lest we lower our guard, a possible sharp resurgence in Covid-19 variants and a corresponding stringency in lockdowns, as well as elevated crude oil prices, should temper our juices,” it however, added.

ECQ impacts

IN a presentation at the House of Representatives Committee on Health on Wednesday, National Economic and Development Authority (Neda) Undersecretary for the Regional Development Group Mercedita A. Sombilla shared the impact of the Community Quarantines on the economy.

Based on Neda estimates as of August 2, every week in ECQ would cost the economy P144.260 billion a week. This will lead to a reduction of economic growth by 0.8 percentage points this year.

She added that the ECQ will lead to an increase in the number of poor Filipinos to between 161,000 and 242,000 per week. This will also render some 607,000 Filipinos jobless per week. Sombilla said between August 6 and 20, 35 percent of the economy will be placed under ECQ; 9 percent under Modified ECQ (MECQ); General Community Quarantine (GCQ) with Heightened Restrictions (HR), 21 percent; GCQ with restrictions (WR), zero; GCQ, 14 percent; and Modified GCQ (MGCQ), 21 percent.

Based on Neda estimates, Sombilla said between August 6 and 20, some 7.25 million workers will be affected under the ECQ; 4.24 million in MECQ; 10.061 million in GCQ HR; zero in GCQ WR; 8.14 million in GCQ; and 12.269 million in MGCQ.

Last Friday, the Neda estimated that placing Metro Manila under ECQ will cost the economy some P105 billion. Socioeconomic Planning Secretary Karl Kendrick T. Chua told reporters that this will also increase the ranks of the poor by up to 177,000 people and render 444,000 Filipinos jobless.

However, Chua said the impact would be mitigated by cash assistance that the government will be providing for those who will be adversely affected by the lockdown.

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