THE worst recession in the country’s history could cause more people to lose their jobs and swell the ranks of the poor, local economists said on Thursday following the Philippine Statistics Authority’s (PSA) release of the second quarter GDP data.
With this, economists believe the government’s target of reducing poverty to 14 percent by 2022 is no longer achievable. Based on 2018 data, the country’s poverty incidence is pegged at 16.7 percent or 17.7 million Filipinos.
Ateneo de Manila University Department of Economics Associate Professor Geoffrey M. Ducanes said the second quarter GDP data indicates that more people lost their jobs, beyond April when the Labor Force Survey (LFS) was conducted, leading to an increase in the number of poor Filipinos.
“With so many workers not earning income for their families in sectors where there are a substantial number of low-income workers, this means some households will necessarily fall into poverty,” Ducanes told BusinessMirror in an email.
“With the economy down, people have less money to spend and so aggregate demand will be down, which makes it harder to generate and maintain jobs,” he added.
Ducanes said in a recent study, they estimated that poverty incidence would increase to 21 percent this year due to the pandemic, from just about 14 percent. This is based on his baseline assumptions in the study.
He said this means around 1.7 million Filipinos will become poor due to the coronavirus 2019 (Covid-19). This will be the case assuming they do not get any cash grants.”Our estimate is . . . an additional 1.7 million poor households because of Covid-19 (and without the cash grant). With cash grant perfectly targeted, an additional 1 million poor households,” Ducanes said in an email.
It can be noted that the 12 percent poverty rate is the estimate among households while the 16.7 percent covers individuals under the government’s estimates.
Ibon Foundation Inc. Sonny Africa said based on the PSA’s official poverty data, their initial estimate is that 5 to 10 million Filipinos could become poor this year.
However, this number could be understated similar to the estimate of unemployment, Africa said. With these “low standards” of the PSA, Ibon estimates 6 to 8 million Filipinos will become unemployed this year.
“The nature of the crisis is a perfect storm for a consumption and service-based economy like ours,” Philippine Economic Society (PES) President Emilio S. Neri told BusinessMirror.
Philippine Institute for Development Studies Senior Research Fellow Jose Ramon G. Albert told this newspaper that targets made prior to the pandemic will be difficult to achieve.
Apart from this, a number of factors prevents the country from lifting millions out of poverty. Albert said Overseas Filipino Workers (OFWs) who are forced to come home would significantly impact the income of millions of families.
Further, in terms of investments, the Philippines is losing potential investments to Vietnam, which has one of the lowest Covid-19 cases and, as such, did not post any contraction in GDP growth this year.
“The main tool for our recovery will not be IMHO (in my humble opinion) on Build, Build, Build but on transitioning to the digital economy. The government should start becoming more realistic about its Build Build Build plans, and instead shift some of these resources and put proper policies in place for digitalization,” Albert said.
However, Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang said stepping up the infrastructure program and contact-tracing efforts are crucial at this point.
These will enable the government to provide jobs to more Filipinos. Ang said with the current state of the economy, there is no doubt that poverty will increase due to the job losses caused by the recession.
Saving lives
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the performance of the economy in the second quarter was expected given the need to save lives.
He said the decision prevented an estimated 1.3 to 3.5 million cases, an estimated 68,000 of which would be severe and critical cases at the peak days, would have overwhelmed the local healthcare system. He added that some 59,000 to 171,000 lives were saved.
However, Chua lamented that this has come at a great cost to the economy as the ECQ shut down around 75 percent of the economy.
Nonetheless, he said the passage of the Bayanihan 2 on second reading at the House of Representatives gives some hope. The bill aims to provide fiscal resources to support the healthcare system as well as enhance testing, tracing, isolation and treatment, which are crucial to boost confidence, get people back to work, and restore consumer demand.
The bill will also support public transport, notably through service contracting and bicycle lanes, that will allow the public to safely get back to work and support critically affected sectors and workers in ECQ areas.
Chua said the bill would also provide capital infusion to government financial institutions (GFIs) to allow them to lend to more to small businesses and help smaller banks.
“Bayanihan 2 is one instrument in our recovery. The acceleration of our Build Build Build program, now expanded to cover health and digital infrastructure, and the 2021 budget are two complementary measures that will improve our recovery prospects, as will be discussed later,” Chua said.
“In the coming weeks, we will present to you the Updated Philippine Development Plan (PDP) 2017-2022, which will incorporate our strategies for a healthier and resilient Philippines. The updated PDP will be our guide in ensuring the responsiveness, continuity, and adaptability of our strategies and reforms to the new normal,” he added.
BBB Update
In a briefing on Thursday, Bases Conversion and Development Authority (BCDA) President Vivencio Dizon said of the 100 flagship projects, the government has retained only 92 projects with a total of P4.1 trillion.
The list included 13 new infrastructure flagship projects and saw the removal of eight projects worth P370 billion.
Some of the 13 projects included the National Broadband Program; Motor Vehicle Recognition and Enhancement System; Balog-Balog Multipurpose Project Phase II in Tarlac; and Lower Agno River Irrigation System Improvement Project in Pangasinan; NLEX Harbor Link Extension to Anda Circle; and the Virology Science and Technology Institute of the Philippines.
The list of eight projects include the Bataan-Cavite link bridge; Dalton Pass East Alignment; Zamboanga International airport; and Kanan Dam, among others.
Dizon said the BBB was reprioritized to include only projects with the available fiscal space for infrastructure projects in 2020 to 2022; project readiness and implementation capacity of line agencies; and economic growth and jobs impact of projects.
He added that the list of projects should include those that hold the interest and risk level of private sector, as well as health and digital economy projects to address emerging needs from COVID-19 and the new normal.
However, Dizon said the government has completed 121 airport projects; 369 commercial, social, and tourism ports; 23,657 km of roads; and 4,959 bridges.
With this, economists believe the government’s target of reducing poverty to 14 percent by 2022 is no longer achievable. Based on 2018 data, the country’s poverty incidence is pegged at 16.7 percent or 17.7 million Filipinos.
Ateneo de Manila University Department of Economics Associate Professor Geoffrey M. Ducanes said the second quarter GDP data indicates that more people lost their jobs, beyond April when the Labor Force Survey (LFS) was conducted, leading to an increase in the number of poor Filipinos.
“With so many workers not earning income for their families in sectors where there are a substantial number of low-income workers, this means some households will necessarily fall into poverty,” Ducanes told BusinessMirror in an email.
“With the economy down, people have less money to spend and so aggregate demand will be down, which makes it harder to generate and maintain jobs,” he added.
Ducanes said in a recent study, they estimated that poverty incidence would increase to 21 percent this year due to the pandemic, from just about 14 percent. This is based on his baseline assumptions in the study.
He said this means around 1.7 million Filipinos will become poor due to the coronavirus 2019 (Covid-19). This will be the case assuming they do not get any cash grants.”Our estimate is . . . an additional 1.7 million poor households because of Covid-19 (and without the cash grant). With cash grant perfectly targeted, an additional 1 million poor households,” Ducanes said in an email.
It can be noted that the 12 percent poverty rate is the estimate among households while the 16.7 percent covers individuals under the government’s estimates.
Ibon Foundation Inc. Sonny Africa said based on the PSA’s official poverty data, their initial estimate is that 5 to 10 million Filipinos could become poor this year.
However, this number could be understated similar to the estimate of unemployment, Africa said. With these “low standards” of the PSA, Ibon estimates 6 to 8 million Filipinos will become unemployed this year.
“The nature of the crisis is a perfect storm for a consumption and service-based economy like ours,” Philippine Economic Society (PES) President Emilio S. Neri told BusinessMirror.
Philippine Institute for Development Studies Senior Research Fellow Jose Ramon G. Albert told this newspaper that targets made prior to the pandemic will be difficult to achieve.
Apart from this, a number of factors prevents the country from lifting millions out of poverty. Albert said Overseas Filipino Workers (OFWs) who are forced to come home would significantly impact the income of millions of families.
Further, in terms of investments, the Philippines is losing potential investments to Vietnam, which has one of the lowest Covid-19 cases and, as such, did not post any contraction in GDP growth this year.
“The main tool for our recovery will not be IMHO (in my humble opinion) on Build, Build, Build but on transitioning to the digital economy. The government should start becoming more realistic about its Build Build Build plans, and instead shift some of these resources and put proper policies in place for digitalization,” Albert said.
However, Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang said stepping up the infrastructure program and contact-tracing efforts are crucial at this point.
These will enable the government to provide jobs to more Filipinos. Ang said with the current state of the economy, there is no doubt that poverty will increase due to the job losses caused by the recession.
Saving lives
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the performance of the economy in the second quarter was expected given the need to save lives.
He said the decision prevented an estimated 1.3 to 3.5 million cases, an estimated 68,000 of which would be severe and critical cases at the peak days, would have overwhelmed the local healthcare system. He added that some 59,000 to 171,000 lives were saved.
However, Chua lamented that this has come at a great cost to the economy as the ECQ shut down around 75 percent of the economy.
Nonetheless, he said the passage of the Bayanihan 2 on second reading at the House of Representatives gives some hope. The bill aims to provide fiscal resources to support the healthcare system as well as enhance testing, tracing, isolation and treatment, which are crucial to boost confidence, get people back to work, and restore consumer demand.
The bill will also support public transport, notably through service contracting and bicycle lanes, that will allow the public to safely get back to work and support critically affected sectors and workers in ECQ areas.
Chua said the bill would also provide capital infusion to government financial institutions (GFIs) to allow them to lend to more to small businesses and help smaller banks.
“Bayanihan 2 is one instrument in our recovery. The acceleration of our Build Build Build program, now expanded to cover health and digital infrastructure, and the 2021 budget are two complementary measures that will improve our recovery prospects, as will be discussed later,” Chua said.
“In the coming weeks, we will present to you the Updated Philippine Development Plan (PDP) 2017-2022, which will incorporate our strategies for a healthier and resilient Philippines. The updated PDP will be our guide in ensuring the responsiveness, continuity, and adaptability of our strategies and reforms to the new normal,” he added.
BBB Update
In a briefing on Thursday, Bases Conversion and Development Authority (BCDA) President Vivencio Dizon said of the 100 flagship projects, the government has retained only 92 projects with a total of P4.1 trillion.
The list included 13 new infrastructure flagship projects and saw the removal of eight projects worth P370 billion.
Some of the 13 projects included the National Broadband Program; Motor Vehicle Recognition and Enhancement System; Balog-Balog Multipurpose Project Phase II in Tarlac; and Lower Agno River Irrigation System Improvement Project in Pangasinan; NLEX Harbor Link Extension to Anda Circle; and the Virology Science and Technology Institute of the Philippines.
The list of eight projects include the Bataan-Cavite link bridge; Dalton Pass East Alignment; Zamboanga International airport; and Kanan Dam, among others.
Dizon said the BBB was reprioritized to include only projects with the available fiscal space for infrastructure projects in 2020 to 2022; project readiness and implementation capacity of line agencies; and economic growth and jobs impact of projects.
He added that the list of projects should include those that hold the interest and risk level of private sector, as well as health and digital economy projects to address emerging needs from COVID-19 and the new normal.
However, Dizon said the government has completed 121 airport projects; 369 commercial, social, and tourism ports; 23,657 km of roads; and 4,959 bridges.
