The gross domestic product results in the second quarter validated what we already know—that the virus is going to take a deep impact on our people’s lives and our firms. The 16.5 percent contraction is the deepest since the 1980s. Prior to going back to modified enhanced community quarantine this week, we were looking at a better second half economic performance. However, this now does not look plausible given the reimposition of lockdowns that will effectively push back the economic restart. Thus, we are not going to see any growth in the coming quarters probably extending early next year.
Based on data from trade and manufacturing released a day earlier than GDP, there are signs that the lifting of the strict restrictions had allowed economic activity to return albeit slowly. This is reflected in the better trade performance in June and the return of some manufacturing activities. Inflation continues to be relatively controlled at below 3 percent in the midst of the pandemic. These are now exposed to more instability in the coming months. Moving forward, the reality is that the economy will have a rough sailing subject to a potential close-open game unless we do a unified and decisive approach in managing the virus and make a clear protocol of how we are to live with it until we have the vaccine. The reality is that most of the assumptions we can make on the economy is based on the confident response of consumers and firms. This clearly is not easy and calibration mechanisms are not easily implementable. From the responses of government economic managers, the focus continues to be in the infrastructure, which is good but may not be enough if not implemented in an overall plan that integrates health systems, workplaces, transportation and housing contexts. What is good is that we hear voices of our economic managers that now recognize that there is a need to first address a unified mechanism in testing, tracing, isolating and treating. This is the base element that needs to be cemented, clarified and understood by the general public if the much-awaited confidence is to be restored.
Since resources will be pushed to the maximum limit, it must be clear that the coming months will lead to challenging business environments that will not allow for full capacity utilizations. Government cannot help everyone with dwindling resources. We cannot continue to borrow, while we are unable to collect more taxes. But government can provide the environment of confidence by ensuring that people and firms can work and do business, while observing the necessary health protocols. Along this line, what is needed is a unified communication plan to have everyone in one accord and understanding. This means that situational protocols need to be communicated to everyone because the minimum health standards may not all apply to different business situations. For example, in an office set up, what additional steps are required to ensure that the workers limit interaction? That will not be the same for a factory or for the malls and restaurants. Clearly, there will be businesses that will require stricter protocols; we need a combination of medical practitioners and industrial engineers working together to develop appropriate workspaces. For those that cannot implement the protocols, private sector practices can be instructive. Some firms that save jobs have focused on alternate working arrangements or reskilling their workers. For essential businesses, firms should be assisted in providing in-house or near workplace accommodations. This is already being done by some BPOs and for some firms that cannot afford the scheme, this is where government should provide subsidies and loans since the firms are continuing to operate. It should be made clear, however, that not all businesses can wait out this pandemic. We have seen many well-loved restaurants already giving up, for indeed, even if they borrow money to maintain operations, they will hardly make any sales since there are few people to visit them.
Apart from situational protocols, government will need to work out a virus-limiting public transportation plan. This is one of the challenges that require a medical, scientific and engineering approach as well. We will leave the how to of this process to the experts, but it is important that this is pointed out. We need to have a clear protocol on this because we need to move people to work and back home safely. We need the same to implement the process of assisting those who are stranded in many urban centers in the country.
All told, these are simply to help restore confidence because we should not worry about the growth of the economy at the moment. We should be developing business, consumption and working protocols on how to continue life with the virus around. What is important is that government and private sector response will be unified and organized for the purpose of protecting the capacities of our people and industries and ensuring that they will be ready to move up swiftly once the virus threat is minimized.