Welcome 2021! New year, new hope! These are what we usually hear when the year opens. When I was in elementary school, I do not like New Year’s Day. To me it was a sign that Christmas is about to end. No more carols, no more holidays—in a few days we will be back to what is reality. In the old school year, after the Christmas break is the exams for the third grading period or the mid-terms in college. This is the fact that we are facing these coming days—facing the exams of life and going back to reality. The Christmas season has somehow eased fears and anxiety brought by the pandemic. Although subdued and quieter than usual, the season helped bring up a bit of economic confidence. The data in the Google mobility report showed that the first week of December showed the closest return to the baseline mobility prior to the lockdowns. Indeed, Christmas have pulled the economy in the last weeks of 2020.
The season also spilled over more hope. The Social Weather Station reports that 91 percent of Filipinos enter this New Year with hope. This is more optimistic than in 2004 when only 81 percent said so. This hope in the midst of the pandemic is possibly coming out of the observation that the worst is over in relation to the economy. The news of the various vaccines already in different stages of implementation in developed countries also brings up expectations that even if the country will receive the first batch of inoculation in the second or third quarter of the year, the availability of vaccines could soon end the pandemic. Add to these is the seemingly “better” data in terms of cases of infections. It can also be a case where people simply want out of 2020!
All these create a sense of optimism that 2021 will be the turnaround year for our economic life. Estimates of economic growth also point to a growth of about 4 percent to 5 percent this year as against the projected contraction of about 10 percent in 2020. Others forecast growth to even reach 7 percent to 8 percent. To our mind, the numbers are not important, as long as there is growth. The deep contraction in 2020 necessitates that growth should begin in 2021 so as we do not slide too far from the 2019 levels. Nonetheless, it should be clear that a recovery is also dependent on external factors beyond our control. There is the new and more contagious strain of the virus that is causing border closures and lockdowns in many parts of the world. Even if vaccines are already being rolled out in the US and much of Europe, the severity and increasing number of cases will again slowdown economic activities in the developed countries. Impositions of travel bans will also halt movement again across countries. This will again cause a domino effect on trade, investment and global demand and possibly affecting our OFWs and their remittances.
What is fully dependent on us is the capacity of our government to strengthen our health systems, to focus on addressing the job losses and preventing firm closures and to ensure that vaccines will be made available and affordable the soonest possible time. This also includes the ability of the country to prevent a second or third wave, which has recently affected our neighbors Malaysia and Thailand and even South Korea—countries that have managed the virus well until this December. Indeed, no amount of experiences and preparation can prevent the lockdown fatigue. We may add that the feeling that the cases are going down could also create unnecessary complacency that could lead to relaxed implementations of protocols. This effectively requires governance consistency.
All told, there is a lot of dependence on the public sector to pick up the slack in the economy even for 2021. Approving the budget is one thing, implementing it is another. Government resources are not that large and therefore must be used efficiently and effectively. Public construction continued to be slowed down by absorptive capacity constraints and this should be corrected immediately. Significant efforts must be to improve and digitize government services. A better digital infrastructure should be given utmost priority as this will expand opportunities in work, business, education and information. Whether the pandemic dissipates within the year or beyond, the world economy has already transformed into digital and the country cannot afford to delay integrating majority of the population within this. We need to do these things well for they will help any recovery sustainable and prepared for the future that is already here. Yes, we can be hopeful for 2021, but we should also be realistic that the availability of the vaccines alone will not instantly bring 2019 back. As B. Kausikan writes in Nikkei Asia—we will do well if things do not get worse.
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The writer of the column entitled PHL and its Asean neighbors is Dr. Fernando Aldaba, Dean of the School of Social Sciences, ADMU and Senior Fellow of ACERD.
ACERD is also inviting you to our Economic Briefing entitled Prioritizing for Recovery on January 21 via zoom. For details please visit cce.ateneo.edu or acerd.ph