‘Gains in reopened economy outweigh Covid risk’
REASONS to open up the economy far outweigh those that require it to be kept closed, according to the National Economic and Development Authority (Neda).
The pronouncement came after the Department of Health (DOH) reported on Wednesday that the new Covid-19 strain that originated in the United Kingdom has already reached Philippine shores.
In a presentation, Socioeconomic Planning Secretary Karl Kendrick T. Chua said shutting down 75 percent of the economy has led to hunger, poverty, joblessness, and an increase in non-Covid-related deaths.
“Neda and the economic team have already recommended this and many were already approved in October. We continue to monitor the economy and health situation to find a better balance to further open the economy,” Chua told BusinessMirror on Thursday.
In his presentation at the Financial Executives Institute of the Philippines (Finex) National Economic Recovery Forum, Chua said shutting down 75 percent of the economy requires a difficult balancing act since a “far majority” face hunger and other diseases during a lockdown.
Neda said as of January 11, 2021, the country’s total Covid-19 cases reached 489,736, while active cases are at 22,114.
Of the active cases, severe or critical cases account for 2,123. Covid-19-related deaths have reached 9,416 as of Monday.
Meanwhile, Chua said that with the economic shutdown, 23.7 million Filipinos went hungry and 4.5 million joined the ranks of the poor.
A total of 2.7 million Filipinos became unemployed and some 438,809 Filipinos died between January and October 2020, due to non-Covid-19 reasons.
He noted that based on data from the PSA, between January and October 2020, only 5,746 Filipinos died due to Covid-19, while 100,676 Filipinos died of other causes.
This is on top of the 78,850 who died due to ischemic heart diseases; 50,195 deaths caused by neoplasms or cancers; and 43,182 deaths due to cerebrovascular diseases.
Chua added that 29,638 Filipinos died of diabetes mellitus; 27,684 died of hypertensive diseases; and 26,219 of pneumonia.
“In the end, someone will have to make a decision and that decision is not going to be perfect. That will have trade-offs, nothing is free, I cannot provide everyone a solution but this is the reality and this is what public policy is really about,” Chua said on Thursday.
Chua also told the BusinessMirror that a decision on opening up the economy will have to be assessed when the fourth-quarter and full-year 2020 GDP growth is released.
In two weeks, the Philippine Statistics Authority (PSA) will be releasing the latest National Income Accounts (NIA) for the fourth quarter of the whole of 2020.
He added that in light of the new strain of Covid-19 arriving in the country, a decision to implement stricter mobility restrictions will all depend on how well the country would be able to contain the spread.
This means, Chua said, the government will have to consider data such as the rise in the number of cases as well as the capacity of hospitals, particularly the availability of hospital beds.
However, University of Asia and the Pacific economist Victor A. Abola said one of the caveats is the “bias” of the national government to impose lockdowns.
In an e-mail to the BusinessMirror, Abola cited the International Monetary Fund’s and the World Bank’s opinion that lockdowns are expensive and unsustainable.
He added that subsidies extended by governments are also costly and will not contribute to long-term growth. Abola said government spending should be directed toward “good short-term and long-term benefits.”
The quarantines, Abola said, “should be more focused at the barangay—or even smaller unit—level, easier to control and cheaper to subsidize.”
First Metro Investment Corporation (FMIC)-University of Asia and the Pacific (UA&P) Capital Market Research said the economy can recover this year and is expected to return to positive territory.
The think tank said GDP is projected to grow 5.5 percent to 6.5 percent this year. This is a rebound from the expected contraction of 9 percent to 10 percent in 2020.
The rebound will be driven by overseas Filipino worker (OFW) remittances which are expected to grow 4 percent to 6 percent this year while government spending is also expected to increase this year.
Government spending is expected to finance its program of Reset (health), Rebound (infra), Recover (skills upgrading), as well as its market reform initiatives (Bayanihan 2, GUIDE, FIST, and CREATE) designed to reinvigorate the economy.
The think tank also expects growth to be boosted by a “mild inflation rate” pegged at 2.7 percent, as well as the completion of big-ticket infrastructure projects.
These projects include the Metro Manila Subway, North Rail, SLEX-Extension, NLEX-East, MRT-7, and Connector-2, which will help ease traffic conditions in Metro Manila.
They also said the rollout of the vaccine and a more focused and localized restriction will likewise improve the country’s economic performance in 2021.
Abola added that coronaviruses are known to dislike hot and humid weather. Coronaviruses may be more virulent, but less deadly.
He added that death rates due to Covid-19 have been on the decline since medical personnel have been successful in understanding the true nature of the disease.