^

Business

Economic legs for recovery

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

Data from the Philippine Statistics Authority (PSA) show that the country’s Gross Domestic Product (GDP) in Q1 2021 contracted by 4.2 percent, marking the fifth straight quarter of economic contraction.

Out of all components in expenditure share, only government spending was able to post a growth at 16.1 percent. Other components such as household spending, investments, imports and exports, and services all recorded declines in Q1 2021.

Domestic employment suffered considerably, showing the tight link between labor market outcomes and the level of quarantine restrictions. In April 2021, NCR has 370,000 more unemployed people.

Our lives are still being dictated by the virus. We have yet to figure out how to live with the virus with the minimum disruption to our lives. The recent surge in cases and the fear arising from the Delta variant may result in re-imposition of a stricter lockdown that could reverse any hoped-for recovery.

Virus or no virus, two legs of our economy are proving to be not just resilient, but ever reliable in keeping the economy afloat in the midst of all the bad news from other sectors of the economy. OFWs and BPOs are still our saviors.

IT and Business Process Association of the Philippines (IBPAP) chair Benedict Hernandez said that the sector generated $26.7 billion in 2020, with employee headcount reaching 1.32 million. Despite cost-cutting measures, the IT-BPO sector was able to hire 23,000 in 2020.

IT-BPM firms were able to invest in work-from-home setup configurations with provision of pocket Wi-Fis and laptops. Hernandez is hopeful the successful adoption of work models and vaccination rollout will allow the country to remain competitive in the outsourcing industry.

The IT-BPO sector is poised to grow its revenue to about $29 billion and create an additional 160,000 jobs by 2022. In 2021, 87 percent of outsourcing firms are projecting a growth of between five to 15 percent, while 13 percent expect flat growth.

As for OFW personal remittances, the BSP said cash remittances grew by 12.7 percent in April to reach $2.3 billion during the month. This is the strongest year-on-year growth in remittances in almost five years.

The strong April remittance growth pushed the total in the first four months of the year to $9.9 billion. This is 4.8 percent higher than the $9.4-billion remittance inflows to the country in the same period last year. It also exceeded the pre-pandemic cash remittance of $9.7 billion in 2019.

Recruitment specialist Manny Geslani warned “not to expect deployment to rise this year. The pandemic has pushed many labor markets to close their borders and OFWs continue to be sent home as economies in their job sites are only now starting to recover…”

Tourism, the other sector considered a big employer at home, suffered the most during the lockdowns. Employment in tourism related industries was estimated at 4.7 million in 2020 or 11.9 percent of total employment. This was lower than the 5.7 million employed in 2019 or 13.6 percent of the total workforce.

In Q1 2021, data from the Department of Tourism (DOT) show that foreign arrivals were down 98 percent from the 1.4 million arrivals recorded in 2020. The slump in foreign arrivals resulted in average hotel occupancies declining to 20 percent in H2 2020 from 25 percent in H1 2019.

Colliers, a property consultancy firm, believes that hotel occupancy is likely to remain below 30 percent in 2021 as tourists are still cautious of traveling due to the pandemic.

Tourism Secretary Berna Romulo Puyat is banking on a successful vaccine roll out to increase travel confidence among foreign and domestic tourists, and help the tourism sector recover.

Jojo Clemente, president of the Tourism Congress of the Philippines told me that Secretary Romulo-Puyat asked the industry to do an inventory of tourism frontliners in different destinations to determine how many doses are needed to have them vaccinated.

Clemente said “it’s really just a matter of having people vaxxed to be able to gradually open destinations. It also depends on how easy it will be to travel. The hiccup with the proposal to use vaccine cards is that no one can validate or authenticate them.”

Clemente added: “We need one national vaccination card with security features. Then have it backed up by having a real time database where these cards can be counterchecked.”

That database and the uniform vax card with safety features won’t be ready until next month, at the earliest. It was an afterthought to let DICT handle this and DICT is now playing catch-up.

The tourism industry is hoping that if we can get a significant number of frontliners vaccinated so they can create tourism bubbles. Bubbles allow vaccinated tourists from Manila to go from the airport to a resort and not leave the resort until it is time to go back to Manila.

One such bubble is now operating for El Nido in Palawan. They are looking at creating similar bubbles in Bohol, Siargao, other parts of Palawan and Boracay.

They have started vaccinating tourism frontliners in Boracay. Through the IATF, the DOT sent 3,000 doses to Boracay last weekend and another 3,000 is coming this weekend.

Clemente said the industry is “closely observing how the Phuket sandbox is progressing. We’re hoping they succeed so we can have a blueprint.”

The Thais recently approved the Phuket “sandbox” plan and welcomed some 4,000 vaccinated visitors since a triumphant reopening this month. The “sandbox” scheme is a desperate move to revive tourism, which made up around a fifth of Thailand’s GDP before the pandemic.

Phuket itself has low infection rates and the vaccine uptake of its 420,000 people is approaching 70 percent. Unfortunately, a surge of COVID cases in Bangkok puts the sandbox in peril.

Thailand and Singapore are also discussing a travel bubble. The Delta variant may dash hopes for that.

What happens to the tourism industry will show how well we are learning to live with the virus. We all need to bring back all that employment and livelihood lost during the lockdowns. Tourism is one important leg supporting our economy and we need to be creative in resuscitating it.

 

 

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

GDP PHILIPPINE STATISTICS AUTHORITY
Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with