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Lockdown’s bureaucratic inefficiencies bring economic contraction

BIZLINKS - Rey Gamboa (The Philippine Star) - April 8, 2021 - 12:00am

In all likelihood, data from the first quarter of 2021 will point to another economic contraction, bringing this to be the fifth consecutive quarter of negative growth for the Philippines despite having been on varying degrees of lockdown for over a year already.

We now hold the title for having the longest and deepest in Southeast Asia, and things are not looking good for the second quarter’s outlook as infection levels continue on their upward trend.

The Q121 economic performance lays to waste the slight gains made earlier in January and February as the government moved to slowly reopen the economy with not enough safeguards to tackle a possible resurgence in virus infections.

While the official figures are still being tallied and its results to be made available only next month, it does not take rocket science to figure out that the modest gains made during the first two months of 2021 will not be enough to offset the negative effects of the recent two week lockdown in the NCR bubble.

To recall in 2020, the economy’s strong performance in the first two months of the year was obliterated with the lockout that went to effect during the last two weeks of March, resulting in a 0.2 percent contraction of GDP for the first quarter.

The extension of extreme lockdowns for most of the succeeding months had further pulled down economic growth – a 16.9 percent dip in the second quarter and an 11.5 percent contraction in the third quarter – resulting in a not surprisingly negative 9.5 percent GDP for the whole year.

Breaking free sans vaccines

Breaking free from this five quarters of downward economic spiral is still possible even without the large-scale availability of vaccines for the rest of the population, especially for the majority in the work force who need to continue working to feed their families.

While the President has set the tone that should facilitate the purchase of more vaccines by companies who are interested in giving these to their employees, the exact details have yet to be hammered out.

Interested parties say that this may still take time, and the earliest vaccine shipments may only arrive in the third quarter considering bureaucratic delays in getting importation permits, including securing tax and duty waivers.

More importantly, since not many companies can afford to bring in vaccines on their own, the number of workers who would have the option to get vaccinated under their own company-initiation vaccination programs would be limited – certainly not enough to hope for the full resumption of economy activities this year.

To sit out the rest of the year without a widespread rollout of vaccinations, employers should come up with additional measures to encourage staff safety. This could include taking precautionary steps in keeping staff protected within their own homes and if they travel to and from work.

Employers need to take a hard look at how much – or little – they can really expect from government in bringing infections down. This kind of micro-management will entail additional work for businesses, but it could also avert costly operational disruptions or shutdowns.

Bureaucratic incompetence

After one year of different levels of quarantines, people have started to realize that they cannot expect much from their leaders. For the latest three weeks of imposed quarantine, the government has pledged to give P1,000 to affected individuals. This is definitely not enough to compensate for the inconveniences brought about by bureaucratic incompetence.

Such miniscule dole-outs, this latest to cost the national government P22.9 billion, are just a small demonstration of how poorly our leaders are handling this pandemic.

The conservative “fiscal prudence” dogma of the economic team, which fared relatively well pre-pandemic, has definitely become a liability. While other countries affected by contagion resurges have compensated for the economic shocks by loosening government spending, ours has kept a tight control over extending aid for affected businesses.

Joblessness has once again spiked as more businesses call it quits or downsize, and this is not just among small- and medium-sized enterprises, but even among those at the top tiers. No wonder multilateral agencies and global economic watchers are getting really worried about the Philippines.

It’s time for the economic team to look at other more creative measures other than waiting to buy more vaccines to reopen the economy. Given the reality of achieving herd immunity only in 2023, the economy may be in a coma by that time.

From talk threads

The talk threads of citizens have recently been busy on beefing up households against the virus. Not only are these about coping when a family member tests positive of COVID-19, but also about how to keep the virus out of the house, especially if there are people vulnerable because of age or comorbidities.

Sound advice comes from the Facebook page of Dr. Jimmy Galvez Tan on how to avoid getting infected with a list of essential things on what to start, stop, and continue.

The PGH Ministry and the Santuario de San Antonio Parish is likewise hosting a Zoom seminar on April 10, 4 p.m., on what to do when COVID hits your home. Guest speaker is Dr. Anna Lisa T. Ong-Lim of the Philippine General Hospital’s College of Medicine. Meeting ID is 882 7377 2291, and passcode is pgh.

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We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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