IF the President will not approve the recommendation of the National Economic and Development Authority (Neda) to place the country under Modified General Community Quarantine (MGCQ), local economists believe “Plan B” could be to loosen mobility restrictions in more regions.
Relaxing mobility restrictions by March 1 was Neda’s recommendation to the President last week. But when asked about his Plan B should the President decide otherwise, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua just told BusinessMirror over the weekend that he would rather wait for the President to decide on the matter.
Nonetheless, economists suggested another option and that is to place more regions under MGCQ to boost consumption and allow more Filipinos to go to work. This will prevent millions from falling into poverty and hunger.
“If the whole country will not be placed under MGCQ, it may be good to put different parts of the country under less restrictions and move on from there. Of course, the decision to open different parts of the country has to be carefully vetted,” Unionbank Chief Economist Ruben Carlo Asuncion told BusinessMirror.
However, Asuncion said a premature lifting of quarantine standards poses a threat to Filipino’s health and livelihoods. “It would be ideal if the vaccinations are already being carried out while lifting more restrictions. It will work well with the recovery of the confidence of consumers and businesses.”
Asuncion added that while vaccines will start arriving in the country in the second quarter, effective coordination between and among national agencies, local governments, and the private sector would be the key to the successful administration of vaccines in the country.
Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco said lifting restrictions in more regions can help the economy. While waiting for the vaccines to arrive, however, the government should use the time to address vaccine administration concerns, he said.
In his view, to achieve herd immunity, at least 70 percent of the population must be vaccinated. This means, it will take time—possibly until the end of 2022—to meet that goal.
“The people are suffering, businesses are closing. Elections are coming and I’m sure Duterte wouldn’t want his anointed one to run under conditions of economic depression and continuing public health crisis,” Chikiamco said.
Not child’s play
Moving from one quarantine abbreviation to another should not be treated as child’s play, Action for Economic Reforms (AER) Coordinator Filomeno Sta. Ana III told the BusinessMirror.
Sta. Ana said “policymakers are too focused on abbreviations” which ordinary Filipinos do not understand. He said Filipinos are looking for concrete solutions on how to open the economy and flatten the curve of infections in the country.
As of February 20, the country still had 34,100 active cases. Since the pandemic started, the country has had a total of 559,288 cases with the addition of 2,240 cases on Saturday.
“Do not treat the opening like it’s a baby’s hand game of ‘close open’. This is serious stuff that involves the health of people. Saying ‘close open’ will not lift people’s confidence,” Sta. Ana said.
“Do something concrete that spurs economic activities but which will not contradict health objectives. Do something concrete that will boost people’s confidence,” he added.
Allowing large gatherings and encouraging more Filipinos to go to malls and dine in restaurants may be difficult if the main source of people’s fear, which is Covid-19, remains a reality, he said.
“The people fear the virus. Get real. So contain the virus and put in concrete measures that will make people feel safe. Shifting from one abbreviation (quarantine) to another misses the point,” Sta. Ana said.
Boosting consumption
Earlier, local economists asserted that placing the entire country under MGCQ by March will boost household consumption but not back to pre-pandemic levels.
Chikiamco had said that consumption growth will return but will still be muted, especially with fears of unemployment still looming.
Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang noted enough consumption demand should the country be placed under the more lenient MGCQ.
Ang expects consumption spending to increase this year due to low base effects. In the second quarter, he said, household consumption spending could already be in the black.
In the fourth quarter of 2020, Household Final Consumption Expenditure (HFCE) contracted 4.5 percent. It posted an average contraction of 5.6 percent in 2020.
Philippine Statistics Authority (PSA) data showed HFCE started contracting in the second quarter of 2020 at 13 percent, followed by the 7.2-percent decline in the third quarter.
The return of more robust household consumption is not expected for at least a year. Chua told the BusinessMirror this could happen by mid-2022.
The middle of 2022 coincides with the Presidential elections. Election years, based on the country’s economic history, are boom years characterized by high GDP growth.
This has been termed as the country’s boom-and-bust cycles, occurring when the economy experiences strong growth one year and weak growth the next. In the case of the Philippines, bust growth occurs during non-election years.
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