Thailand
Philippines: Gov’t to review economic goals as NCR returns to ECQ
MANILA, Philippines – Economic managers will revisit their goals after President Rodrigo Duterte approved a proposal to tighten restrictions in Metro Manila to slow down a new surge in infections believed to be fueled by the Delta variant.
The interagency Development Budget Coordination Committee (DBCC) will “review” this year’s economic targets once the second quarter gross domestic product data is out, Socioeconomic Planning Secretary Karl Kendrick Chua said in a Viber message on Friday, following the announcement of new lockdown measures.
As the country detects more cases of the highly contagious Delta variant, the National Capital Region will be put under enhanced community quarantine (ECQ) — the strictest lockdown there is — from August 6 to 20 to avert another deadly surge in infections that could overwhelm hospitals again.
But unlike the previous ECQ last March that covered the capital and four nearby urban areas, the new one would be limited to Metro Manila, in what seems to be an attempt to minimize economic damage. This time around, the government also granted businessmen’s request for ample time to prepare for the looming lockdown. Vaccinations will likewise continue.
Official economic data for the second quarter will not come out until August 10, but economic managers have indicated that GDP was likely back to growth territory already, not because the economy is mounting a convincing recovery but because the data would be distorted by low-base effects from last year’s pandemic-induced slump.
That said, sealing off NCR, the main economic hub, poses a big threat to the Duterte administration’s 6-7% growth target this year. Chua estimates that the two-week lockdown in the capital would result in P210-billion economic losses, as well as throw 177,000 more people into poverty and displace 444,000 workers. Presidential spokesperson Harry Roque said on state television that it was a “painful decision”.
“Lockdowns exact a direct hit on the Philippine economic engines as it hinders our most potent source of growth: household spending and the projected tightening of mobility curbs will likely shackle the beleaguered services sector and constrain overall industrial activity,” Nicholas Mapa, senior economist at ING Bank in Manila, said.
“Furthermore, the second round of ECQ will likely force would be investors to rethink their plans as lockdowns appear to be the blunt weapon of choice to deal with the crisis, despite authorities repeatedly vowing to never resort to such measures,” he added.
Will there be ‘ayuda’?
For Leonardo Lanzona, labor economist at Ateneo De Manila University, the government must “protect the workers” from the upcoming lockdown by giving out cash aid or “ayuda”. Chua agreed with Lanzona, but stressed that “cash aid is not free from heaven.”
Sought for comment, Budget Secretary Wendel Avisado said the government would look for “available funds” to finance a new round of cash aid once his agency receives the green light from the Office of the President. However, Avisado did not identify the possible sources of these available funds while Finance Secretary Carlos Dominguez III did not respond to a request for comment.
Finding funding sources is one thing, but having the authority to spend is another. Bayanihan 2 law, the second stimulus package that authorized the distribution of cash aid during the previous lockdown, already expired and economic officials have been cool to a third rescue package being pushed by House lawmakers over fears of incurring more debts. The 2021 budget, meanwhile, did not provide funds for cash aid in the event of hard lockdowns.
“The stimulus on the demand side should continue by giving subsidies to workers and firms. There is already a severe supply constraint and if we don’t enhance demand, nothing will happen,” Lanzona of Ateneo said.
“Resilient firms will remain confident if they know that consumers have money to spend.”
Source: https://www.philstar.com/business/2021/07/30/2116375/govt-review-economic-goals-ncr-returns-ecq