Solid Economic Figures a Precursor of Strong Recovery
The new sets of economic figures officially released by the government last week are very impressive, to say the least. They indicate the economy is not only on the mend—it is powering through the pandemic after months of varying degrees of lockdowns.
Of course, everybody knew the economy recovered in the second quarter of this year mainly because of the low base effect (the economy shrank 16.5 percent in Q2 of 2020). But the 265-percent rise in the May volume of production index and the double-digit growth rates sustained by exports and imports in the same month could be signs of a quick economic recovery.
I may sound so optimistic after seeing a few sets of economic data, but the numbers are telling us that easing the lockdown rules to further reopen the economy is working. More Filipinos re-joined the labor force and contributed significantly to an improvement in the manufacturing index.
Data from the Philippine Statistics Authority show the volume of production index jumped 265 percent in May, faster than the 155.6-percent increase registered in April. The VoPI, in contrast, sank 73.2 percent in May last year. The value of production index for manufacturing, meanwhile, surged 249.5 percent in May from a year earlier, faster than the 145.5-percent increase in April.
The higher manufacturing index is reflected on how our trade sector performed. Exports and imports climbed at a double-digit rate for the third straight month in May due to the gradual opening of major global economies and the improving manufacturing sector.
Merchandise exports grew 29.8 percent in May to $5.89 billion from $4.54 billion a year ago, while imports jumped 47.7 percent to $8.64 billion from $5.86 billion. The May figures are a continuation of the bullish figures in April when exports climbed 74.1 percent and imports surged 152.8 percent.
I expected Trade Secretary Ramon Lopez to be elated at the trade numbers. He remains upbeat that the Philippines will be able to sustain the upward exports trajectory given the improving situation in our major trading partners. The US, China and Japan are opening up their borders and easing travel restrictions because of their aggressive and successful vaccine rollout programs. The Philippines, meanwhile, eased its lockdown rules and even allowed 100-percent operating capacity during the enhanced community quarantine and modified ECQ months of March and April this year.
More positive numbers are coming up that compliment our improving Covid-19 data. The inflation rate slowed down in June to 4.1 percent after hitting 4.5 percent in the previous three months. Timely state interventions to stabilize rice prices, and lately those of pork, have worked. The government earlier eased rice importation and allowed meat imports to address supply constraints in the market.
The previous week’s statistics on the unemployment rate, as I discussed previously in this column, is equally significant. The unemployment rate eased to 7.7 percent in May from 8.7 percent in April, as the number of jobs increased by 1.45 million with the easing of the quarantine restrictions in Metro Manila and surrounding provinces.
The Philippines is registering these positive economic numbers because we have managed well the spread of Covid-19. Our Covid-19 cases are averaging 4,000 to 5,000 daily. The lower figures will give our authorities the confidence to fully reopen various economic sectors, including services and tourism, to bring back more jobs to our people.
Unfortunately, our neighbors in Asia are not doing well in managing the spread of Covid-19. Indonesia, Malaysia and Thailand had daily cases of 38,124, 9,180 and 9,276, respectively. The Covid spike in these three Southeast Asian nations will ultimately slow down their economy. The lockdowns that Indonesia, Malaysia and Thailand are applying now to contain the virus infections will restrict the economy and increase unemployment.
What’s happening in our neighbors is a reminder that we cannot lower our guard yet. Filipinos should remain vigilant and continue to observe the health protocols of wearing face mask, washing of hands, and social distancing until we reach herd immunity or full vaccination to 50 million Filipinos.
We have grabbed the upper hand in the fight against Covid-19. We should preserve our gains and learn from our recent experiences.