In search of economic boosters

Someone asked me the other day what I see to be the “bright spots” that could carry our economy through the difficult way out of the pandemic-induced recession. Where can we look to for hope of recovering jobs and incomes lost by millions of Filipinos? In which sectors and industries can revitalization happen sooner?

I found myself somewhat stumped. Of course there are the obvious ones like online retail and other online services that will be prominent in our emerging new normal lifestyles—plus the logistics industry and internet service providers on which these activities hinge. But there is little I could think of beyond those, knowing that the virus is not about to fade away, with infections in fact seen to be escalating. I’ve already pointed out that the largest contributors to jobs and incomes in our economy—hence the logical focus in any attempt to revive the economy quickly—are also those industries and areas that are riskiest to restore to their pre-COVID-19 levels.

Let’s take a closer look at the numbers. The sectors contributing the most jobs in our economy are wholesale and retail trade (8.6 million jobs as of the January Labor Force Survey, or 20.2 percent of all jobs); and agriculture, fishing, and forestry (8.5 million jobs, or 20 percent). Next are construction (4 million or 9.4 percent), manufacturing (3.7 million or 8.6 percent), and transport and storage (3.4 million or 8 percent). All together, these sectors account for two-thirds of the jobs in the economy, hence the ones we would like to reopen and resume activity in, if we want to get the most workers back on the job.

But wholesale and retail trade has been a major casualty of the lockdowns, except in food and other essential goods that had to continue flowing. Even so, moving them physically from production areas to processing facilities and/or on to the markets had been constrained by local governments’ checkpoints, impeding, if not outright blocking, passage even of vital food products. Production of crops, livestock, and fish had to go on, but as already said, flows along supply chains were significantly impeded, leading some not to harvest at all.

Construction, manufacturing of non-essentials, and transport services also stopped for most of the second quarter, and only began resuming in July when the quarantines eased up. Even so, it was still at a limited scale for lack of public transport and the need for physical distancing. All told, I estimate a 30-70 percent reduction in the level of activity during the second quarter (April to June) in these sectors contributing the bulk of our jobs and incomes.

The one potential driver that is directly under government’s control is public construction of infrastructure under the Build, build, build program—assuming that its execution could be drastically ramped up from previous years. The Commission on Audit’s annual audit reports show disbursement rates of only 34.1 and 39.6 percent of total allocated budget for the Department of Public Works and Highways in 2017 and 2018, respectively (2019 figures are still not in the COA website).

The Department of Transportation’s track record is worse, at 25.6 percent in 2017, even falling to 23.8 percent in 2018. In 2017, the COA cited “slow implementation of 144 locally funded and nine (9) foreign-assisted projects due to change in policy directions by political leaders and economic managers, projects put on hold pending decision by top management and delays in procurement due to complexity of projects.” Worse numbers in 2018 suggest that such hurdles persist. Add to that how lack of public transport still hampers movement of workers, plus the need for much greater caution on their proper distancing, and ramping up construction to already deficient pre-COVID-19 levels seems a dream. Thus, BBB may yet fail to be the savior we all wish it would be.

I hate to sound like a pessimist or prophet of doom, but I cannot deny what I’m seeing with my (I hope flawed) economist’s eyes, either. One hopes that by pointing these out, we can help the authorities to be more deliberate and focused in the effort to restore Filipinos’ lives back to normal.

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