Consumption to shield Philippines from headwinds

MANILA, Philippines — Sustaining the downtrend in the number of COVID cases and supporting the growth in consumption would help shield the Philippines from a weakening global economy, a World Bank economist said.

World Bank senior economist for the Philippines Rong Qian said in a forum that keeping the number of confirmed COVID cases on a sustained downward trajectory would be crucial to restoring the confidence of consumers.

“The good thing is the Philippines is a very consumption-driven economy. As long as the number of cases continues to go down and people feel safe to go out, that would boost domestic demand quite a lot,” said Qian.

“The 2021 national budget is also a very big budget that will not only support spending, but also create more jobs through infra projects,” he said.

Compared with some of its ASEAN neighbors like Thailand and Malaysia, the Philippine economy is less reliant on external trade of goods for survival.

Qian noted, however, that the country is also an exporter of services and is also a major recipient of remittances from abroad.

“We cannot forget how important it is to keep the cases low and keep it declining. These are under the control of the government,” Qian said.

Several countries in Asia, including some of the country’s major trade partners, are now battling a second wave of the viral infection.

Malaysia has returned several cities under lockdown, including its capital Kuala Lumpur, after a spike in new cases.

China and Japan are also bringing the second wave of contagion under control.

Qian noted that as the Philippines had more integrated trade relations with these countries, success in containing the fresh wave of infections would ultimately be beneficial for the country’s external trade performance.

“The Philippines is more integrated on the trade side with China, Japan, Thailand, Malaysia and it seems that they are over the first wave. Hopefully they do not go back to the second wave. And that will help the Philippines on the external side,” she said.

Last month, the Octa Research Group composed of researchers from the University of the Philippines, University of Santo Tomas and US-based Providence College said the curve of transmission has been on a downward trend after months of community quarantine.

The group, however, discouraged the lifting of community quarantines just yet.