The Duterte administration was urged on Wednesday to initiate measures to encourage consumption spending that could pave the way for recovery from the Covid-19-induced economic slump.
At the First Metro Investment Corp.-University of Asia and the Pacific’s (FMIC-UA&P) midyear economic briefing, economist Bernardo Villegas said consumption spending remains the primary driving force for the economy and accounts for over 70 percent.
In the second quarter, data from the Philippine Statistics Authority (PSA) showed Household Final Consumption Expenditure (HFCE) contracted 15.5 percent. However, Government Final Consumption Expenditure (GFCE) posted a growth of 22.1 percent.
“Until Filipinos conquer their fears, regain their confidence to travel, to spend, [the economy will not recover],” Villegas said. “We have to address the whole issue [of confidence]. People suffer from fear. Until fear disappears, [spending will not increase].”
Villegas said while a stimulus will help prop up the economy, it is really consumption spending that will ensure the country’s recovery simply because of the role of consumption spending in GDP.
UA&P economist Victor Abola said speeding up the country’s recovery will depend on the quick implementation of “strategic moves” such as addressing supply-chain bottlenecks and efforts to review and craft new business models and digitize business processes.
Abola also expressed optimism that efforts made by the government, especially those in the financial sector, will lead to a “one healing nation” that will pave the way for a “more serious recovery” next year.
However, Abola said he was optimistic that the country would at least be able to celebrate Christmas this year in the traditional way—with family and friends congregating in a single place.
This optimism is driven by the resumption of construction projects. Abola said the construction industry should have not been asked to stop working during the pandemic since most were horizontal projects and did not require close contact between workers.
He said, however, he welcomed Public Works Secretary Mark Villar’s recent report that at least 50 percent of the government’s infrastructure projects have resumed.
“This is not to downplay the impact of the pandemic. There will be pain all over. For a consumer country like the Philippines, definitely, to a tourism dependent economy such as Thailand. Even oil producing wealthy countries will share the pain. This Covid is a great equalizer,” First Metro Chairman Francisco Sebastian, for his part, said.
“In the school where I come from, when things get rough, when times get tough, we grit our teeth, clench our fist, and we scream, on top of our voice: ONE BIG FIGHT!” Sebastian said.
In July, Ateneo Center for Economic Research and Development (ACERD) Director Alvin P. Ang said reopening the economy and loan-financed social safety nets can help boost the economy, but these will not be sustainable and the overall lack of confidence prevents millions of Filipinos from getting jobs.
He said even with a general community quarantine remains in effect, the government must assure that protocols are clear and steps to manage Covid-19 from the national to local levels are in place.
Ang said the country cannot wait for a vaccine to be available to provide assistance, or employment, for the millions who have lost their jobs and those who may still lose it.
He said that recently, the government announced that it intends to improve testing, contact tracing and isolation efforts for those infected, which Ang said are “good” initial steps.