ECONOMISTS at the Ateneo de Manila University said with the ongoing coronavirus disease 2019 (COVID-19) pandemic, an economic recession is “not unimaginable” this year, thus social protection for many who have lost their income and have become vulnerable to poverty and hunger is needed.
According to a statement of the Ateneo Center for Economic Research and Development and the faculty members of the university yesterday, the negative impact of the enhanced community quarantine (ECQ) will be substantial, as significant segments of the economy are going to stop.
“The stoppage will choke both supply and demand, because curtailing workers and work mean no income for many, and hampering production of food and services. This situation will lead to a decline in output,” the statement, titled arresting the impact of COVID-19 on the PH economy, said.
The economists said government should take the lead in protecting economic assets, particularly human resources, the country’s capacities and structures.
“Therefore, government should set aside its growth targets (firms in turn, should also let go of their profit targets this year) and focus on ensuring adequate health/medical services and full protection of our health workers, providing social protection to the vulnerable population, and addressing the economic and social costs of ECQ,” the statement said.
The economists said an economic stimulus to induce economic growth is not useful at this stage of the pandemic.
“It is therefore clear that the Philippine government will need sufficient funds to do the stated tasks,” the statement said.
“According to the Department of Finance, we have enough resources to fund our 2020 budget, then what can be done is to reallocate and frontload significant portions of it to fund the above,” it added.
In addition, there is still a large unused budget for 2019 with an unobligated P1.1 trillion which can be reallocated to fund the said tasks, according to the statement.
Meanwhile, a study put together by several University of the Philippines economists proposes a social insurance package that aims to “minimize the economic hardship of all who are forced to retreat for the collective good.”
The study — A Philippine Social Protection and Economic Recovery Plan — was written by Alfredo Paloyo, Cielo Magno, Karl Jandoc, Laarni Escresa, Ma. Christina Epetia, Maria Socorro Bautista and Emmanuel de Dios.
“The public health solution comes at an economic cost: individuals and businesses will now have to face what is undoubtedly an enormous liquidity gap,” the report said.
“The economic managers estimate the loss from COVID-19 at ₱187 billion, and to fight this, we should be prepared for the deficit to increase to at least five percent of GDP (gross domestic product),” it added.
The study advocated for a social insurance package, even though it has features of a fiscal stimulus.
It said: “The success of the plan should not be evaluated on the basis of whether it stimulated aggregate demand; that is not the objective. Instead, the question to be asked is, ‘Were we able to minimize the economic hardship of those who were forced to retreat for the collective good?’”
The authors pointed out the crisis is not caused by a weakness in the economy, but rather an external shock that will hopefully subside in a few months.
“Spending at least ₱100 billion to ₱300 billion more on the different social protection and economic recovery programs (we have) outlined will protect our people, avert a recession, and arrest the misery that COVID-19 will bring,” the study said.
