Economic team: Another lockdown to kill more jobs, bury more people in poverty

by Ben O. de Vera, Philippine Daily Inquirer, 12 Oct 2020

MANILA, Philippines—The Philippines cannot revert to stringent COVID-19 lockdowns if it wanted to save jobs and lift more out of poverty when the pandemic ends, according to economic managers as two weeks of strict quarantine in Metro Manila and four provinces last August weighed down infrastructure spending and foreign trade.

Finance Secretary Carlos G. Dominguez III on Monday (Oct. 12) said the economic team had repeatedly warned about the impact of lockdowns — which, in turn, resulted in millions of job losses — on poverty incidence.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua earlier flagged a temporary increase in urban poverty amid the pandemic.

On Monday, the Department of Budget and Management (DBM) reported that public infrastructure spending dropped 25.4 percent year-on-year to P44.3 billion in August.

It was mainly due to “unintended delays in construction activities as a result of the rainy season and the implementation of the two-week modified enhanced community quarantine (MECQ) in the National Capital Region (NCR) and nearby regions” which had a surge of COVID-19 cases.

From January to August, expenditures on infrastructure and other capital outlays declined 11.5 percent to P394.5 billion from P445.9 billion in 2019, no thanks to “the moderated implementation of construction activities as a result of the lockdowns and restrictions brought about by the pandemic,” the DBM said.

It added that “infrastructure and other capital outlays will likely remain muted with the discontinuance of some capital outlay projects which can no longer be implemented nor completed due to the pandemic” as provided for by Republic Act No. 11469, or Bayanihan to Heal as One Act.

The Bayanihan 1 law allowed President Rodrigo Duterte to divert allocations to COVID-19 response.

As a result, budgets of agencies implementing big-ticket infrastructure projects, like the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTr) had been slashed to divert the money to dole outs for the poor and displaced workers at the height of the pandemic lockdown.

DBM data showed that the DPWH’s 2020 budget had been reduced by P126.3 billion—the biggest among all agencies— under Bayanihan 1, while the DOTr suffered a P16.5-billion cut.

Last Saturday (Oct. 10), the country’s chief economist also blamed the return of stricter community quarantine last August for a halt in the gradual recovery of the external goods trade.

The state planning agency National Economic and Development Authority (Neda) attributed the 21-percent drop in foreign trade last August to the more stringent 15-day MECQ imposed in Metro Manila and surrounding provinces of Bulacan, Cavite, Laguna and Rizal.

“As a result, the trade performance reversed after three months of showing gradual signs of recovery,” Neda said.

“The August trade performance is a clear indication that gains from reopening the economy can easily be reversed when we impose strict lockdowns that restrict economic activity,” said Chua, who is also Neda chief.

“We need to keep this in mind if we wish to regain our growth trajectory,” Chua said.

Chua said “the government will continue its efforts to gradually open the economy and ensure the availability of more and safer public transportation, in tandem with strict observance of health protocols.”

“We also need to facilitate trade and improve our export competitiveness,” he said.

“Programs focused on streamlining, reviewing of regulations, and using technological innovations, including digitalization would also be vital in keeping the economy on track,” Chua added.

The Philippine Statistics Authority’s (PSA) monthly integrated survey of selected industries (Missi) report for August released last week showed that factory output shrank by 9.9 percent year-on-year that month—the first time since April that the volume of production index (VoPI) drop was single-digit.

Chua told the Inquirer last Saturday that the narrower factory output decline in August meant more goods were probably produced compared to production at the height of the longest and most stringent COVID-19 lockdown in the region. These products, however, weren’t exported due to mobility restrictions.

Also, Chua attributed improving manufacturing to the bulk of production for the domestic market.

TSB