GMA: V-shaped recovery hinges on sharp focus on the economy

FORMER president Gloria Macapagal-Arroyo and several lawmakers said the country could secure “V-shaped” recovery after the Covid-19 pandemic if the government will put more focus on economic concerns.

Arroyo, an economist, said at an online meeting with the House Committee on Economic Affairs on Thursday that the government can now focus on the economic impact of the pandemic as the Philippines’s fatality rate is lower compared to the global percentage.

“The Philippines’s fatality rate of 3.7 percent is lower than the global percentage of 5 percent,” she noted. “My own personal sense is that in the dilemma between health concerns and economic concerns, after having imposed what some refer to as the longest lockdown in the world, the balance should now be tipped towards economic concerns.”

Arroyo said the most proximate comparison to the 2008 global recession is the current global impact of the pandemic. She was president during that period.

“That recession originated from the global financial sector. The upcoming recession will have a broader cause, i.e, the abrupt reduction in business activity across almost all sectors because large portions of the work force and consumer base were degraded due to quarantine conditions. In this sense, the starting point for recovery might be broader and deeper,” she said.

“In the economic front, the macro policies and programs to recover from recession do not have to be reinvented, e.g., monetary policy and fiscal pump priming have long been classical tools at our disposal, and I am fully confident in the ability of our economic team to design a solution to suit today’s situation,” she added.

Arroyo sees President Duterte as someone willing to take strong and swift action to help the economy.

“President Duterte has demonstrated the willingness to take swift strong action when needed, such as being among the first to ban flights from China during the early days of the pandemic, and the lockdown last March which in some aspects still remains in place today. Thus, if severe consequences result from tipping the balance in favor of the economy, we can be confident the President can take the necessary remedial measures,” she said.

Arroyo also said information, organization, communication, containment and contact tracing are still key to address the health crisis.

“I am here primarily to share some hopefully useful inputs arising from my experience with the SARS outbreak in 2003, the H5-N1 Bird Flu in 2006, the H1-N1 swine flu in 2009, and, since it is now clear there will be an economic aftermath to the Covid-19 crisis, my experience with the global recession arising from the so-called Subprime Crisis in 2008,” she added.

Arroyo said the country’s main disadvantage during the SARS crisis in 2003 is that it was a new phenomenon in our lifetime.

“Pandemics then were the stuff of history books which talked of the Black Plague during the Middle Ages and the Spanish Flu during World War I. Thus, when Covid-19 entered our country’s consciousness early this year, I think the entire world was suffering from short-term memory, because the world was not as ready as it should have been given that it should have had the benefit of experience from SARS just 17 years ago,” she added.

Support for stimulus

Meanwhile, Arroyo backed the proposed economic stimulus of the House.

“On the part of Congress, I have great confidence in the work that the committees of Congressman Joey Salceda, Congresswoman Sharon Garin and Congresswoman Stella Quimbo undertook to help frame a program to address the recession that now faces us. I trust the Senate will also do its part,” she added.

In the same meeting, Salceda said a “V-shaped” recovery was secured during the Arroyo administration due to quick approval of the stimulus plan.

Salceda said the Philippines already had a stimulus plan presented and approved by the Arroyo Cabinet by January 29, 2008 before global markets collapsed in mid-2008 and bottomed in March 2009.

“PGMA’s economic recovery plan was just 1.95 percent of GDP. The Philippines faced a tougher environment due to agricultural woes and unstable political conditions, but the government acted quickly; hence we had better results than the rest of the world,” he said.

In the first quarter of 2010 or still during Arroyo’s term, the GDP growth had reached 8.1 percent.

“While the US and other OECD were debating over recession, the Philippines’s economic recovery plan was ahead of these debates by five months, and ahead of the first wave of big bankruptcies by eight months and ahead of American Recovery and Reinvestment Act of 2009 [ARRA] by one year and two months,” Salceda said.

“The sooner we perk up the animal spirits of consumers, entrepreneurs, businesses and investors, the quicker and the more V-shaped the recovery can be,” he added.

The National Economic and Development Authority earlier explained that a V-shaped  economy recovery is characterized by a sharp decline in growth, followed by a sharp recovery.

Rollout ready

ON Wednesday, Salceda said both houses of Congress and the economic managers are finally reaching a compromise to roll out the much-needed additional stimulus package in three tranches with the last tranche to be inserted under the 2021 national budget.

Salceda said these moves will help the country to reach his projected 9.1-percent GDP target in 2021.

Salceda said a special session will be called for the finalization and approval of these economic stimulus packages within the next two weeks.

Salceda said the House adoption will adopt the Senate counterpart bill to the Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (ARISE).

If ever, this version will be the second stimulus package as Congress considered the Bayanihan to Heal as One Act as the first stimulus package.

Salceda said the main provisions of the Senate plan, which currently amounts to a total of P157 billion, may further be capped to P140 billion. This second stimulus is expected to be implemented up to September of this year.

Also, Salceda said the House leadership is now considering the Executive department “openness” to a third tranche of economic stimulus by July.

He said this recovery measure can include roughly half or around P280 billion of the difference between the proposed ARISE and the emerging Senate version. The target implementation of this third  stimulus is fourth quarter of this year.

Salceda said they also recommended the inclusion of the remaining half of the stimulus package or around P280 billion of the difference between the Senate version and ARISE, which will not be included in a third stimulus tranche, in the 2021 national budget.


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