EDITORIAL - Economic headwinds

A mutation of the highly infectious Omicron variant, BA.2.12.1, has been detected in Metro Manila and Palawan, according to the Department of Health. The DOH report should remind the public that while COVID cases remain low in the country, the coronavirus remains very much around, and could still cause sickness and death especially as vaccine immunity wanes.

The continuing pandemic is just one of the risks that could slow down economic growth as the nation prepares for leadership change by mid-year. There was good news in the first quarter as the gross domestic product grew by 8.3 percent, beyond market expectations of 6.8 percent, as the economy emerged from the Omicron surge and reopened.

Economists, however, warn that low government spending and a pullback on business spending due to the elections would likely slow down GDP growth in this second quarter. Uncertainty arising from the lack of clear economic policies of the incoming administration as well as inflation that could dampen consumption could also slow down the consumer-driven economy.

There are also headwinds overseas beyond the government’s control, among them Russia’s invasion of Ukraine that has kept fuel prices sky-high, economic slowdown in China and monetary normalization in the United States.

Apart from pump prices, inflation is expected to be pushed up by higher prices for basic food items including canned sardines and instant noodles. The approved increases in the suggested retail prices of a wide range of basic goods were announced yesterday by the Department of Trade and Industry, as it acknowledged the rising costs of materials needed for production.

The nation could face the headwinds better if there is a smooth leadership transition and the new government hits the ground running in dealing with economic woes and the pandemic. People can do their part by getting fully vaccinated and boosted, and by continuing adherence to COVID safety protocols particularly masking. Recovery remains fragile, both in terms of public health and livelihood, and it will require concerted effort to sustain it.