Return to MECQ risks reversing economic recovery path | Inquirer Business

Return to MECQ risks reversing economic recovery path

MANILA, Philippines — Bringing back Metro Manila and neighboring provinces that accounted for over two-thirds of the economy to more stringent lockdown would slow recovery even as President Duterte’s chief economic manager on Monday said the 15-day modified enhanced community quarantine (MECQ) should also slow down COVID-19’s spread.

“In the short run, the return to MECQ may negatively affect livelihoods, consumer demand and production. However, if the time is used to boost all our medical resources and to prevent further spread of the virus, then the MECQ will be positive for the long haul,” Finance Secretary Carlos G. Dominguez III said.


“The whole world is learning how to dance with this virus: two steps forward, and one step back,” Dominguez added.

President Duterte on Sunday night approved to revert to MECQ from the less-stringent general community quarantine (GCQ) at present in Metro Manila as well as the provinces of Bulacan, Cavite, Laguna and Rizal, heeding an appeal from the healthcare and medical community for a “timeout” as infections surged when three-fourths of the economy resumed last June.


The MECQ will take effect on Aug. 4-18.

Economic managers had noted that tax collection, the purchasing managers’ index (PMI), and other economic indicators improved last June as the economy gradually opened up.

However, the latest data released on Monday showed that the Philippines’ PMI continued to decline in July and also worsened compared to June, reversing the previous month’s rebound.

London-based global information provider IHS Markit Ltd. said last month’s PMI slipped to 48.4 from June’s 49.7.

A PMI below the neutral 50-mark meant there was a year-on-year drop in manufacturing activities, which the Philippines has been recording since March when the COVID-19 lockdown was first imposed.

“Conditions are yet to improve at the start of the third quarter. It was hoped that June PMI numbers would signal the start of a recovery for manufacturers, as output tentatively increased. However, production levels dropped back into contraction territory in July, while new orders decreased for the fifth month in a row,” IHS Markit economist David Owen said.

“As parts of the country remained under lockdown, goods producers appeared to lose out in terms of foreign trade, as new export sales fell dramatically despite the relative easing of global restrictions. While domestic demand may stabilize, it will be important for businesses to re-strengthen foreign sales in order to recover from this period of likely deep recession,” Owen added.


IHS Markit projected gross domestic product (GDP) to shrink by 6 percent year-on-year during the second quarter, a deeper contraction than the first quarter’s 0.2 percent, such that the economy fell into a technical recession during the first half.

“Jobs are also a long way from returning to pre-COVID-19 levels, with latest data signalling a steep fall in employment again in July. With unused capacity still apparent amid a fall in outstanding orders, it could be a while before firms bolster their payroll numbers,” Owen said.

Last April, during the first full month of enhanced community quarantine (ECQ) which was said to be the most stringent lockdown in the region, the unemployment rate jumped to a 15-year high of 17.7 percent, equivalent to 7.3 million jobless Filipinos nationwide.

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TAGS: COVID-19 lockdown, Department of Finance (DOF), economic slide, modified enhanced community quarantine (MECQ)
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