The unprecedented drop in the country’s gross domestic product (GDP) in the second quarter of 2020 was worse than expected, given the reduced economic activities because of the series of lockdowns in the previous quarter. The 16.5-percent contraction in the GDP was the worst in the history of the country. While all our Asean neighbors were also hit by the coronavirus pandemic, our economic performance in the second quarter is dismal relative to other countries in the region.
We are technically in a recession. Ordinary Filipino jeepney drivers, construction workers, or restaurant crew do not need to read and understand economic statistics to feel and see the dire situation of our economy.
The Social Weather Stations survey last May also showed that 83 percent of Filipinos believed that their quality of life had worsened in the last 12 months. Only 10 percent of the respondents said they had the same quality of life, and 6 percent said it got better.
The worsening public health crisis compounds generational disparities in income, jobs, and opportunities. While richer local government units can supplement the inadequacies in social amelioration measures and basic services, hard-up LGUs will have to wait for the trickle from the national government, if at all. As a result of the crisis, the poor have become much poorer.
It is saddening to observe that despite the gargantuan funds being spent by the government to address the COVID-19 pandemic, as reported by the Department of Budget and Management, the impact has not been seemingly felt. As of June 30, P374.89 billion has been released to various government agencies to support their COVID-19 response programs and projects. But the response to the crisis has been reactive, rather than proactive and aggressive.
Most disheartening is the slow distribution of cash assistance to 18 million families, and the failure of such aid to make more than a passing difference in the lives of the people. The initial target was to give cash aid to the poor, displaced workers, and other sectors hit hard when the entire Luzon was placed under enhanced community quarantine. But until now, the distribution of the second tranche of assistance has not been completed.
Further, it is confusing to hear the “mixed” messages we get from President Duterte and the economic managers. Mr. Duterte has repeatedly claimed that the government is out of money and that it cannot implement longer lockdown measures because funds have been depleted. On the other hand, the Department of Finance said the government has the resources necessary to endure a “drawn-out struggle.”
Meanwhile, business groups have appealed to the government to increase its stimulus financing, with the Philippines reportedly one of the lowest spenders for recovery in the region. Thailand’s total package amounts to $84.09 billion, while Indonesia and Singapore are allotting $64.27 billion and $45.06 billion, respectively, to their stimulus efforts.
That said, financial aid, while currently necessary, cannot last forever. The Philippines also needs to create jobs and livelihood opportunities. But recent developments such as the closure of broadcaster ABS-CBN and the approval of the Anti-Terrorism Act of 2020 don’t exactly instill investor confidence. In fact, during a recent webinar organized by the Philippine Bar Association, Far Eastern University Institute of Law dean Mel Sta. Maria cited how these developments are eroding the rule of law in the country. Without policy stability, how can businesses confidently invest in the Philippines and create jobs for Filipinos?
The lives and the future of millions of citizens are at stake. What Filipinos need is a new deal with the government. In this deal, transparency and accountability in the distribution of relief must first be ensured. Second, the necessary institutional reforms in terms of achieving a stable and balanced policy environment and addressing pressing economic reforms related to an investment- and stakeholder-driven economy should be implemented, alongside the observance of the rule of law. And third, a clear and multi-stakeholder road to recovery needs to be charted.
—————-
Dindo Manhit is founder and managing director of Stratbase Group.