The present numbers are showing that the government is finally winning the war against Covid-19 from both the perspectives of health and the economy.
Coming off a devastating 9.6 percent contraction in 2020, its worst performance since World War II, the Philippine economy rose by 7.7 percent in its gross domestic product in the last quarter, topping analysts’ median estimate of 6.3 percent.
This brought the full-year 2021 economic expansion to 5.6 percent, slightly above the government’s revised target of five to 5.5 percent.
The 5.6% GDP growth of the Philippines is the highest in the entire Southeast Asia, at a time when other countries in the region posted between 1 and 4% under the present pandemic conditions.
Last year’s performance was significantly buoyed by the fourth quarter performance as private consumption accelerated amid the holiday season and better mobility following the sharp decline in Covid cases.
Private consumption recovered by 4.2 percent from the 7.9 percent drop in 2020, an indication of returning consumer confidence due to lesser restrictions and increased vaccine coverage.
Government expenditure also expanded by seven percent. The industry and service sectors grew by 8.2% and 5.3%, arts, entertainment and recreation saw the biggest expansion at 30.1%, while accommodation and food services expanded by 22.8%.
In a press briefing, Socioeconomic Planning Secretary Karl Chua said the sustained growth last year was driven by the management of risks such as targeting the areas with highest risk and allowing the rest of the economy to open.
“Our policies to move from a pandemic to a more endemic paradigm have led to broad-based expansions across almost all sectors, despite challenges brought about by the continued persistence of COVID-19, various levels of quarantines, and prevalence of natural disasters,” Chua said.
However, the growth momentum is expected to hit a snag in the first quarter of 2022 due to the Omicron variant resulting in record-high daily COVID-19 infections.
This is where Senator Christopher Bong Go, chairman of the Committee on Health, observes that balancing or health and economy objectives play a big role.
“Since day one ng pandemya, maingat na binabalanse ng gobyerno ang kalusugan at kabuhayan ng mga mamamayan natin. Kahit may krisis, sinisikap nating maging malakas at maunlad ang ekonomiya upang magkaroon muli ng trabaho ang mga nawalan at maiwasan ang gutom at hirap,” remarked Go.
The senator warned that the continuous spread of Covid-19 and its highly transmissible variants may still likely disrupt economic activities in the foreseeable future.
“Tuloy na sana ang direksyon ng ating recovery efforts kung hindi dumating itong Omicron at dumami muli ang bilang ng nagkakasakit. Pero marami pa rin tayong dapat ipagpasalamat. Patuloy tayong maging disiplinado at mag-ingat. Huwag natin sayangin ang pinaghirapan natin noong nakaraang taon,”
He underscored the need to sustain an aggressive vaccination drive to fast-track return to normalcy.
He said getting vaccinated is still the best investment any person can make to protect one’s health. “Kung mas maraming Pilipino ang mabibigyan ng proteksyon gamit ang bakuna, mas kokonti ang bilang ng mga tinatamaan ng malubhang sakit. Mas luluwag pa ang mga patakaran para sumigla pa ang ating ekonomiya,” he added
As of January 26, the government has obtained a total of 216.5 million doses of COVID-19 vaccines and administered 125.1 million doses. Of this figure, 60.1 million Filipinos have received their first dose while 58.1 million are fully vaccinated. Another 6.9 million have obtained their booster shots.
Coronavirus mutations are already causing headaches. The Philippines imposed tighter Alert Level 3 pandemic restrictions in Metro Manila and nearby areas this month, as the highly transmissible omicron variant pushed daily cases to a record over 39,000 in mid-January, from as low as 168 in December.
“It appears that this is a spike that is of a very temporary nature,” Chua said, adding severe cases and deaths are sharply lower than they were during delta variant-driven wave last year.
“So, I think there is an opening for us to lower the alert level in the coming weeks,” he added. “We are still on track for our full-year growth so long as we go back to Alert Level 2.”
Meanwhile, Cabinet Secretary Karlo Nograles has announced that Metro Manila is reverting back to Alert Level 2, while Baguio City stays in Alert Level 3, effective from February 1 to 15, Malacañang said on Sunday, January 30.
Seven other areas will be placed at Level 2, namely Batanes, Bulacan, Cavite, Rizal, Biliran, Southern Leyte and Basilan.
The Philippine economy, however, is expected to return to its 6 to 7 percent growth trajectory in 2022 after nearly two years of grappling with the pandemic despite the threat of the Omicron variant, according to First Metro Investment Corporation, the investment banking arm of the Metrobank Group.
FMIC said this year’s economic growth estimated to be anywhere between Asean Business projection of 6.6% to Goldman Sach’s 7.1%, will be driven by sustained domestic demand, easing inflation, election expenditures, and accelerated government spending on infrastructure projects.
Significantly, the InterAgency Task Force for Emerging Infectious Diseases aims to achieve full vaccination of 82% of our population by June 2022.
Recovery to quiet tremors
This should send doubting Thomases on the Philippines ability to bounce back quickly.
Prior to the pandemic, in 2019, we were one of the fastest growing economies in the world. In just one year, pundits starting thinking that we might have returned to being “sick man of Asia”.
Posting over 6 percent average annual growth between 2010 and 2019 (computed from the Philippine Statistics Authority data on GDP growth rates at constant 2018 prices), the Philippines was touted as the next Asian tiger economy.
The Philippines’ economic growth faltered in 2020 after experiencing one of the deepest contractions in the Association of Southeast Asian Nations (ASEAN) that year.
What went wrong?
How does one of the fastest growing economies in Asia falter? It would be too simplistic to blame this all on the pandemic.
First, the Philippines’ economic model itself appears more vulnerable to disease outbreak. The next administration ought to look seriously into improving our model built around the mobility of people, yet tourism, services, and remittances-fed growth that are all vulnerable to pandemic-induced lockdowns and consumer confidence decline. International travel plunged, tourism came to a grinding halt, and domestic lockdowns and mobility restrictions crippled the retail sector, restaurants, and hospitality industry.
Fortunately, the country’s business process outsourcing (BPO) sector is demonstrating some resilience — yet its main markets have been hit heavily by the pandemic, forcing the sector to rapidly upskill and adjust to emerging opportunities under the new normal.
Second, pandemic handling was also problematic. Draconian measures are useful if it buys a country time to strengthen health systems and test-trace-treat systems. What we are now seeing on hindsight, is that these are the building blocks of more efficient containment of the disease.
However, if a country fails to strengthen these systems, then it squanders the time that lockdown affords it. This seems to be the case for the Philippines, which made global headlines for implementing one of the world’s longest lockdowns during the pandemic, yet failed to flatten its Covid-19 curve.
Third, the Philippines suffered from delays in its vaccination rollout, and later affected by lingering vaccine hesitancy.
The most damning inadvertence at the very least was trusting Pfizer and Moderna who have been announcing vaccine deliveries as early as December 2020 with no less than the Secretary of Foreign Affairs Teodoro Locsin and Philippine Ambassador to the Washington DC drumming up an “Arriva America” chant.
The Philippine vaccination program only started March 1, 2021 following the arrival of Sinovac from China the day before.
What went right?
The relentless vaccination thrust of the government fully jabbing more than half of the country’s population as the fourth quarter approached, combined by the strategic easing of lockdowns in specific areas showing decline of Covid-19 cases, enabled country’s gross domestic product to increase to 6.9% in the July-September period, followed by a revenge of 7.7% in the last quarter of 2021.
In perfect timing, the Christmas spending obviously helped.
With lessons learned in governance faced with an unseen enemy such as a pandemic, and the promise of improving our healthcare system, with the refurbishing of our government hospitals and the universal healthcare system as priorities, plus remodeling our economy for more resiliency and sustained growth, we can now look to getting out of the recession and onto a better and prosperous future, moving forward.
Indeed, a crucial challenge for President Duterte, but definitely another great legacy in his favor.