Duterte reopens Philippine economy but ‘can’t be like Trump, Bolsonaro’ as Covid-19 cases rise
- The president says he cannot emulate the ‘devil-may-care attitude’ of his American and Brazilian counterparts towards the pandemic
- His decision to relax some restrictions comes amid a rise in cases that has seen the Philippines record the second-most confirmed infections in Southeast Asia
“We cannot afford really a total epidemic or pandemonium. We are poor, we cannot afford to gamble,” Duterte said on Wednesday. “We are still grappling with the first wave.”
He said he would “have to be very circumspect in reopening the economy” given the recent spike in coronavirus cases. The country has 47,783 confirmed infections as of Tuesday, the second highest in Southeast Asia after Indonesia, and 1,309 deaths.
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“While health measures are absolutely necessary for us in fighting this pandemic, increasing economic activity in a responsible manner is a matter of national survival and priority,” Dominguez said at a government forum after Duterte’s remarks.
“Health and livelihood is not a binary choice. We must protect lives in ways that do not prevent us from earning a living. This is a tough decision to make but we need to do this.”
He also said the government expected the Philippines’ debt-to-GDP ratio to rise to 50 per cent from 39 per cent last year as it increased borrowing to mitigate the economic impact of the pandemic.
“We have the capacity to borrow … and we have the capacity to pay these loans in the future,” Dominguez said, adding that revenues in the year’s first half were down 16 per cent from the corresponding period last year as virus curbs closed businesses.
The government is seeking a record 4.3 trillion pesos (US$86.84 billion) budget for 2021, focused on reviving an economy that is expected to decline by 2 per cent to 3.4 per cent this year, its first contraction in two decades.
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Central Bank of the Philippines chief Benjamin Diokno, speaking at the same forum as Dominguez, said given the country’s strong fundamentals before the pandemic, he expected the economy to have a “strong bounce” next year, with growth of between 8 per cent and 9 per cent for 2021.
However, Jonathan Ravelas – chief market strategist for BDO Unibank, the country’s largest bank – said the country had not really stabilised in terms of the economy or the pandemic, and that the two could not be differentiated “because they are intertwined”.
Ravelas said once Covid-19 cases were reduced, he saw a potential “U-shaped recovery” that could propel the economy to growth of 7 per cent next year. He has written off the rest of this year as a period of rehabilitation, during which as many jobs as possible should be preserved and businesses aided by the government to stay afloat.
“What we want to preserve is the goose that lays the golden egg – the consumer,” Ravelas said, adding that Filipinos might hesitate to spend if more taxes were slapped on goods, or if they were afraid of losing their jobs or even being infected if they went out to shop or eat.
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Ron Acoba, founder and managing director of Trading Edge Training & Consultancy and a former equity dealer at Credit Suisse, said only consumer demand would lift the economy.
“A stimulus package will help but not sustain it. You won’t be able to stoke consumer demand as cases continue to go up, [which] will make consumers ever more cautious.”
Once the Covid-19 curve is lowered, Acoba sees GDP growth recovering to between 3 per cent and 5 per cent.
“I don’t see consumption recovering that much,” he said, adding that the pandemic has eroded much of the population’s savings. “I think we’ll enter a stage of replenishing what we’ve spent first before we go back to how we did in the past.”
