Neda: Further easing of restrictions to bring P8.3B, 36,000 jobs back

MANILA, Philippines—At least P8.3 billion would return to the economy and 36,000 jobs would come back to life nationwide weekly if COVID restrictions were further eased as Delta cases decline, the country’s chief economist said on Thursday (Oct. 28).

Socioeconomic Planning Secretary Karl Kendrick Chua said this would augur well for Philippine economic recovery.

On Wednesday (Oct. 27), Chua said declining daily infections and rising vaccination rates have provided an opening for the National Capital Region (NCR) to move to a less restrictive alert level 2 from currently level 3, which would improve gross value added (GVA) by P3.6 billion per week and bring back initially 16,000 jobs.

Estimates of the state planning agency National Economic and Development Authority (Neda), which Chua also heads, also showed that moving areas outside NCR from level 3 to 2 would result in a P4.7-billion weekly gain in GVA plus 20,000 jobs available anew.

If Metro Manila could move to the least stringent alert level 1, it would recover P10.3 billion weekly and add 43,000 jobs, said Chua.

Outside NCR, gains in GVA under alert level 1 would be a bigger P13.3 billion on top of 56,000 additional jobs to be made available a week, Neda estimates showed.

Chua declined to provide his estimates of gross domestic product (GDP) growth during the third quarter which was badly hit by the Delta outbreak. But he pointed out that unlike previous lockdowns at the start of the pandemic, quarantine restrictions in August allowed nearly all sectors to operate, except those which would lead to violations of social distancing rules in closed spaces.

The Neda chief said he remained optimistic the Philippines would hit the downscaled 4 to 5 percent GDP growth target for 2021, which would reverse 2020’s record 9.6-percent contraction, but still slower than pre-pandemic levels.

Given limited resources, Chua said that “there’s no point in giving subsidies or Bayanihan 3 or whatever form of fiscal stimulus if the economy is not allowed to operate.”

Chua clarified that the government may be amenable to providing targeted subsidies in selected sectors which remained closed or restricted as long as there was excess money.

“If you give a stimulus, then there should be a way for the people to spend it,” Chua said.

“But if you lock down the economy continuously in varying levels, then there will be little opportunity for that stimulus to be used. My position has always been to safely reopen the economy, because that is the best and most sustainable way to get the economy started,” Chua said.

“Because we have addressed the spike [in cases and] increased vaccination, I think the most effective way to restart the economy is still the opening” of more economic sectors, he added.

Even as the economy further reopened, economic think tanks were divided on their views on the Philippines’ recovery moving forward.

In an Oct. 27 report, London-based Capital Economics said that “with virus cases falling and vaccination rates increasing, the Philippines is finally turning a corner.”

While economic growth likely slowed in the third quarter of 2021 due to the outbreak of the more infectious Delta variant, Capital Economics said its mobility tracker showed movement of people and goods in the Philippines was already at its highest level since March 2020, at the onset of the COVID-19 pandemic and before 75 percent of the economy was sent to its knees by one of the most stringent lockdowns in the region.

“Progress on vaccination has been relatively slow, but with 90 percent of front line workers and senior citizens in the big cities now fully vaccinated, the risk of future lockdowns is falling,” Capital Economics said.

“On the external front, exports have started to gain some momentum in recent months,” it said.

UK-based Pantheon Macroeconomics was less optimistic as the Delta episode during the third quarter slightly subdued consumption and yet reduced household savings.

“The direct blow of Delta to consumption in the Philippines was trivial, looking at the August bump in the net sales index,” said Miguel Chanco, Pantheon Macroeconomics senior Asia economist.

“But the big picture remains bleak, as such resilience has come at the expense of the longer-term recovery, with savings drawn down in the third quarter to keep spending steady,” Chanco said.

“The rebuilding of savings from their 2020 crash will continue to weigh on buying intentions which, unsurprisingly, are still subdued, at less than half the pre-virus level,” he added.

Oxford Economics, also a UK-based think tank, in an Oct. 27 report flagged a downside risk to the Philippines’ and Thailand’s exports to China amid slowing economic growth that was seen to dampen consumption on the mainland.

TSB