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The candidates: Not looking forward

Near the end of September, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the following: “The estimated long-run total cost of the Covid-19 pandemic and quarantines for present and future generations of Filipinos is estimated at P41.4 trillion.”

“While we will recover to the pre-pandemic level by the end of 2022 or early 2023, it will take several more years before we converge to our original growth path. We expect the economy to converge to the pre-pandemic growth path by the 10th year.”

There was one significant takeaway that caused concern—the “P41.4 trillion” number as “the present and future costs.” The Philippine economy as measured by the GDP was cranking out about P5.5 trillion every quarter. Therefore, to call for a loss of P41.4 trillion over 10 years is like saying that for the next 10 years the Philippines would be growing at 75 percent of capacity or missing one quarter a year. That sounds catastrophic.

Chua: “In 2020, we lost P4.3 trillion; in the next 10 to 40 years, we estimate that we will lose up to P37 trillion.”

However, the details are more interesting than the topline number. “The estimated total loss due to lower consumption is P4.5 trillion, private investment and returns in the same period is around P21.3 trillion, and the estimated total loss due to the resulting productivity loss in human capital investment and returns is estimated at P15.5 trillion for the next 40 years.”

Note, that type of complete analysis is what we need and should expect from the man in charge of a formidable team at Neda.

The press, pundits, and politicians missed the most important conclusion and if at all, included it as almost an afterthought. This is the second and most important takeaway.

“While we will recover to the pre-pandemic level by the end of 2022 or early 2023, it will take several more years before we converge to our original growth path. We expect the economy to converge to the pre-pandemic growth path by the 10th year.”

What Chua is telling us is that the total size of the Philippine GDP—approximately $380 billion in 2019—will be back to pre-pandemic levels “by the end of 2022 or early 2023.” That is good news. That will put our recovery ahead of countries like the US and equal to or greater than our regional neighbors with only Vietnam perhaps beating us to recovery.

The unknown is the trend of Covid. Further, if “Omi” is as bad as some experts think it might be, we will all be in the same sinking ship.

Missed by almost all, what Chua is saying is that it will take some time of indeterminate length—years not months—to get back on the “original growth path” that the Philippine economy has been on for the past 15 years.

The reason for that is because the pandemic devastated the businesses that created the growth path; international tourism, outsourcing/POGO, consumer spending, and even agriculture.

On November 16, “Presidential bets bare economic platforms.” All talked “Infrastructure spending.” The closest anyone came to what we should do to adapt to the new economic conditions was Moreno. “The Philippines should also move from business process outsourcing to knowledge process outsourcing.” Except that has been the goal for the past 10 years.

It’s a new world out there and so far nothing solid and specific has been put on the presidentiable table. 

E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.

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