INDUSTRY leaders said on Tuesday keeping the nation’s capital under general community quarantine (GCQ) after one year of lockdown until Covid-19 vaccines are administered risks deepening the economic malaise. They expressed belief that President Duterte’s judgment call to reject the economic managers’ recommendation for a March 1 nationwide modified general community quarantine (MGCQ) could have considered how badly mobility restrictions are hindering the hoped-for recovery.
This, as an economist counseled against an over reliance on easing mobility restrictions to spur the economy, which he projected as still in contraction in the first quarter but posting base-effect recovery in the second.
Relaxing lockdown restrictions further will not do much to prop up the economy as the public remains conservative in spending their money during a recession, ING Bank Manila Economist Nicholas Antonio T. Mapa said in a statement on Tuesday.
“Moving to relax restrictions will only have a modest impact on overall spending as the more likely impediment to consumption is the lack of consumer confidence,” Mapa said.
Meanwhile, public and private leaders polled by the BusinessMirror said the government should not wait for the vaccine rollout to take place before lifting restrictions on mobility and business. They argued it is difficult for the economy to recover when quarantine measures are hindering various sectors from operating.
Legislative-Executive Development Advisory Council Private Sector Representative George T. Barcelon said the President’s decision to keep Metro Manila under GCQ will reduce chances of recovery this year.
At the Cabinet meeting on Monday, Duterte rejected the economic team’s proposal to place the entire Philippines under modified GCQ. The President, his spokesman said, wants the vaccines to come in first before easing restrictions further.
“This will dampen the recovery and make our economy more precarious,” Barcelon explained in a text message.
“I suggest relaxing the age-restriction field and expand more public transportation for commuter convenience. While the mass inoculation is still many months to wait, [the government should] focus on improving the prophylactics and other palliatives to allay the fear of being infected to gain public confidence,” he added.
For Barcelon, policymakers should not wait for the vaccines to come given the delays they may endure in the procurement process, and must instead enforce medical programs that will boost individual immunity and, in turn, confidence to go out.
Francisco S. Zaldarriaga, president of the Philippine Ecozones Association, added that the impact of retaining GCQ in Metro Manila on firms depends on the availability of transport units. As echoed by many business groups, employees find it difficult to reach their workplaces given the limited capacity permitted in public transport vehicles.
“If ecozone is in a GCQ area, the effects will be to the extent of the locator employee’s ability or inability to move from home to work and vice versa,” Zaldarriaga said.
100,000 ecozone workers
Charito B. Plaza, director general of the Philippine Economic Zone Authority, admitted at least 100,000 workers of the 1.6 million employed in locator firms have yet to return to site. Primarily, she disclosed there are factories ordered to shut down for the meantime in compliance with the granular lockdowns imposed by local governments.
Likewise, some 14 percent of industries doing business in economic zones have yet to reopen their plants due to a lack of raw materials and decline in buyer demand.
Plaza reported a few firms find it costly to source shuttle services and rent housing for their workers as required by the government to protect the labor force from the virus. Otherwise, she concluded the Chief Executive’s decision to sustain GCQ in Metro Manila will not affect her agency’s performance this year.
Business groups have been asking the government to authorize all establishments to reopen to allow the economy to recover from the declines it suffered last year.
The Philippine economy in 2020 endured its worst decline since 1947, as GDP slid 9.5 percent on the closure of commerce and trade in the second quarter. As of October, official data showed more than 3.8 million Filipinos are unemployed in a time of economic crisis.
‘Not enough to boost economy’
Regardless of the President’s decision not to ease restrictions in the NCR, ING’s Mapa said discretionary spending is not anticipated to pick up given the current situation.
The economist noted that the footfall and vehicular traffic have bounced back following the gradual reopening of the economy in the past months. However, he argued that malls and restaurants were not able to max out the prescribed capacity restrictions because a safety-conscious public prefers staying at home.
He pointed out that consumer confidence remains poor in the Philippines, given the high unemployment rates and anxiety over catching the virus.
“People are not spending because they do not have a job or are not as confident in employment prospects to warrant shopping for pseudo luxury items and cheap thrills during a recession,” he explained. “People are not out and about because they fear the virus and crave access to a credible vaccine and not because the malls close at 7 pm instead of 9 pm.”
On the other hand, Mapa said the “scarring effects”—including the joblessness and business shutdowns—of the pandemic will likely be deepened if the solution to aiding the economy is through easing of lockdown protocols.
He stressed that the economy is no longer on “pause” and a “meaningful” solution is required so the Philippines will return to its pre-pandemic levels.
“Authorities continue to believe that relaxing restrictions will unleash potent consumption like a racehorse charging out of the gates. Instead, once mobility curbs are relaxed, we will see the once formidable stallion limp out to the track, bearing deep and lasting scars from the ongoing recession,” the economist explained.
Q2 recovery
While the economy is expected to contract still in the first quarter, Mapa said that a base-effect recovery will be seen by the second quarter but noted that it may “gradually fade.”
“We continue to believe that growth momentum will be subdued, regardless of type of [community quarantine], with consumer confidence shot with the vaccines still out of reach,” he said.
“The one true antidote to the lack of confidence would be the vaccine procured by the government as this would generate GDP momentum via increased government expenditure while simultaneously curing Filipinos’ anxiety tied to catching the virus,” he added.
A stimulus program, citing Bayanihan 3, will help to jumpstart the labor market to support household spending anew, Mapa explained.
The P420-billion Bayanihan measure recently received support from over 220 lawmakers in the House of Representatives. The bill aims to boost recovery efforts for the economy, which contracted by 9.5 percent last year.
“The once proud stallion can ride as he did before, with a healthy dose of vaccination and a shot in the arm (or leg) strong enough to make him look past all the scars on his back,” Mapa concluded.
