MANILA, Philippines — Any new stimulus must be given to targeted sectors that need them the most and complemented with further easing of curbs to allow people to spend the aid, the National Economic Development Authority said Thursday.
“If you give stimulus, there should be way for people to spend it. If you lockdown the economy continuously in various levels, there would little opportunity to use that stimulus,” Socioeconomic Planning Secretary Karl Kendrick Chua, also director-general of NEDA, said in an online forum hosted by the Economic Journalists Association of the Philippines (EJAP).
The Duterte administration has reconfigured its pandemic strategy after Metro Manila and some areas outside the capital returned to strict curbs in August amid the onslaught of super-contagious Delta variant. The renewed restrictions back then prompted the government to spend P10.89 billion in taxpayers’ money on cash aid for poor families, adding strain to the state’s already bleeding balance sheet.
From the previous practice of sealing off an entire region, which would require a massive cash aid program, the government has begun instituting “granular” lockdowns with varying alert levels. The move was meant to minimize any economic losses from prolonged restrictions, which could cost the economy a total of P41.4 trillion over the next 40 years based on NEDA’s estimate.
Metro Manila, responsible for 32% of gross domestic product, is currently under Alert Level 3. Based on NEDA’s estimates, downgrading restrictions in the capital region to Level 2 could add P3.6 billion in economic output and 16,000 employed Filipinos per week. If further loosened to Level 1, an additional P10.3 billion would be added to the country’s GDP while 43,000 more people would find work every week.
Asked if the looser curbs would convince the government to roll out a fresh stimulus, Chua did not provide a categorical answer but said the resulting rebound in economic activity would generate revenues that the government could use to fund cash aid for areas under targeted lockdowns.
“The additional resources that could be collected from more economic activity can be used for more targeted support to certain sectors that still would not be allowed to open, rather than what we did last year where we shut down a big part of the economy and try to give everyone something,” Chua said.
For this year, the Duterte administration is hoping for GDP to grow 4-5% before further expanding to 7-9% in 2022, abandoning an ambitious goal that originally included a double-digit growth target next year.
As the pandemic upends the economy, some traditional growth drivers, including election-related spending, might be muted next year. In the same EJAP forum, Ronald Mendoza, dean of Ateneo de Manila University’s School of Government, said mobility restrictions and strict health protocols could prompt candidates for next year’s election to pour money on their digital campaigns, which is cheaper compared to gathering large crowds of voters.
Chua said a weak poll spending has already been factored in economic managers’ latest projections. “We’ll have to see to what extent this situation is going to impact the gross domestic product from election-related spending. Overall, there are many other growth drivers apart from the electoral cycle,” he said.