Encouraging Economic Data Supports Reopening
There are definite signs that the economy is coming back to life. Encouraging economic data proves that we can reopen the economy while containing the pandemic at the same time through targeted lockdowns.
President Duterte decided to downgrade the restrictions in Cebu City to modified enhanced community quarantine (MECQ) from ECQ and retained the general community quarantine (GCQ) status of Metro Manila starting July 16, on the recommendation of Secretary Carlito Galvez, the chief implementor of the government’s national policy on Covid-19.
A few sections of Metro Manila are still experiencing strict quarantines because of the spike in Covid-19 cases. Some barangay authorities may be remiss in their duties to enforce health protocols. This is a matter of enforcement, and I believe authorities, especially the police, can correct this by improving their monitoring efforts and imposing strict quarantine and social distancing rules.
It is encouraging to know that some members of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases are supportive of the move to reopen the economy. The economy must be reopened gradually to generate jobs.
Trade Secretary Ramon Lopez, a member of the task force, is moving in that direction. He announced that beauty salons, barbershops and restaurants can accommodate more customers starting July 16. Salons and barbershops in areas under GCQ are allowed to increase their capacity to 50 percent from 30 percent, while those in areas under MGCQ can increase their capacity to 75 percent from 50 percent. These establishments can also offer more services, such as full hair treatments, aside from the basic haircuts.
Meanwhile, restaurants in areas under GCQ will be allowed to increase their dine-in capacity to 50 percent starting July 21 from just 30 percent, while those in towns and cities under modified GCQ can raise their capacity to 75 percent from 50 percent.
I also fully support Secretary Lopez’s appeal to local government units to move the start of curfew hours from 10 pm to 12 midnight to enable these establishments to operate longer, earn more revenues and consequently employ more workers.
Despite the easing of the restrictions on businesses, these establishments are expected to strictly comply with safety measures, such as social distancing, temperature checks on customers, wearing of protective gear such as face masks and regular washing of hands. Most 400 establishments surveyed by the Department of Trade and Industry so far were found compliant with these measures.
We are glad to note that because of the reopening of business establishments at a greater capacity, the economy is starting to show signs of recovery from what appeared to be a deep slump at the height of the lockdown in April and May.
Investors remain hopeful about the economic prospects, as data from the Board of Investments showed investment approvals jumped 112 percent in the first half of 2020 to P645.3 billion from P304.4 billion in the same period last year. Secretary Lopez, who also serves as BOI chairman, said the robust growth amid the pandemic points to the country’s resilience as we begin to relax the restrictions after a prolonged lockdown.
Other data indicates the economy is bouncing back. The change in quarantine rules boosted the manufacturing output toward stability at the end of the first half. Cabinet Secretary Karlo Nograles also noted “evidence of increasing economic activity” in the country, such as the Bureau of Customs’ collections of P42.54 billion in June, which surpassed the target for the month by 4.4 percent.
We also welcome the decision of Tokyo-based debt watcher Japan Credit Rating Agency Ltd. to provide the Philippines a credit score of “A” with a “stable” outlook in June.
Debt watcher Moody’s Investors Service last week likewise affirmed the Philippines’s investment-grade rating of “Baa2” with a stable outlook. It noted that the government’s fiscal position in recent years provided a buffer against a rise in public indebtedness due to shocks, such as the Covid-19 outbreak.
Meanwhile, the Bangko Sentral ng Pilipinas reported that the gross international reserves rose for a sixth straight month to hit an all-time-high $93.3 billion in the end of June this year. This means the country’s ability to manage foreign exchange risks is stronger than ever. The figure is expected to rise further in the coming months, supporting the value of the peso, already one of the best-performing currencies in the region today.
Last but not the least, data from the Philippine Statistics Authority showed the manufacturing sector is showing signs of recovery based on the results of the Monthly Integrated Survey of Selected Industries. Despite the decline in the volume of production during the month, the sector saw an increase in the capacity utilization of some of the largest sub-groups, like food and beverage manufacturing, in May compared to April.
Secretary Karl Kendrick Chua of the National Economic and Development Authority said these improving economic indicators became possible because the first 100 days since March 16, 2020, under the enhanced community quarantine gave the country enough time to improve its health system capacity and save thousands of lives from the virus.
We have to coexist with the virus in the meantime, although we are encouraged by reports that several vaccines are progressing through clinical trials. The government should always calibrate its policies from time to time in dealing with the pandemic based on the current data at hand, without sacrificing the economy.