By Kyle Aristophere T. Atienza, Reporter
THE PHILIPPINE government should boost household spending by giving another round of cash aid to encourage companies to keep their investments amid a stringent coronavirus lockdown in the capital and nearby provinces, according to analysts.
“Even if you provide assistance to enterprises, if no customers are coming in because they don’t have money, the government will just continue to give supply-side aid for no significant gains because of low demand,” Asian Institute of Management economist John Paolo R. Rivera said in a Viber message. “Try stimulating demand first; supply will follow.”
President Rodrigo R. Duterte placed Metro Manila and the provinces of Bulacan, Cavite, Rizal and Laguna under an enhanced community quarantine from March 29 to April 4 amid a fresh surge in coronavirus infections.
Operations of a number of businesses would be reduced during the week, his spokesman Herminio L. Roque, Jr. said at the weekend.
The weeklong strict lockdown would only have a minimal impact on the economy during the Holy Week, when government and private offices and financial markets are shut on April 1 and 2, he added.
The government might extend the lockdown as both public and private hospitals inside and outside the capital region continue to be overwhelmed by the spike in coronavirus cases, analysts said.
“More families losing savings and maybe even more marginal businesses closing will just worsen economic scarring and make recovery even more difficult,” IBON Foundation Executive Director Sonny A. Africa said in a Facebook Messenger chat.
“Demand-side solutions like substantial cash transfers to poor and low-income households are exactly what’s needed now,” he added.
Mr. Africa said extending cash aid worth about 10,000 monthly to as many as 19 million families for at least three months “would significantly relieve economic distress and help spur more rapid recovery.”
“This is not just to alleviate household suffering but also to spur demand and give micro, small and medium enterprises a good reason to stay in business,” he said. “They are also the missing link to make the huge monetary interventions have any traction because businesses will see that it can be worthwhile to start borrowing.”
The Philippine economy slumped to a record 9.5% last year as Mr. Duterte ordered one of the longest and strictest lockdowns in the world.
Mr. Roque said beneficiaries might get a smaller amount this time compared with last year.
The government should include previously ineligible families that are also affected by the strict lockdown, Terry L. Ridon, convenor of InfraWatch PH, said in a Messenger chat.
“The conditions of the two enhanced community quarantines are no different for families deprived of working contributors due to the limitations,” he said. “There should be no distinction in the daily social amelioration package rate.”
“A new funding round might be necessary to cover all aspects of our coronavirus response,” Mr. Ridon said.
Mr. Africa said lawmakers should fast-track measures that seek to provide for another round of stimulus measures.
“The post-enhanced community quarantine economic rebound last year quickly lost steam and the modified enhanced lockdown in August likely contributed to this,” he said. “Employment for instance had plateaued by Oct. and is now actually even lower than in July 2020,” he added.
Mr. Africa said the enhanced lockdown this week would affect about half of the economy. “If it disrupts economic activity as much as needed to have an appreciable effect on the spread of COVID-19, then it will also significantly dampen job generation and gross domestic product straddling the first and second quarters,” he said.
“There is no more reason for economic managers to keep rejecting additional stimulus.”
Mr. Ridon said the construction sector, which makes up a significant chunk of economic output, would generate jobs for the country’s working class.
“We need to ensure that there are no further delays in implementing the major infrastructure projects around the country, whether funded by the budget of public-private partnerships,” he said.
Mr. Ridon said the government should address regulatory roadblocks that delay projects and affect job sustainability.
The Palace earlier said priority construction projects would continue during the strict lockdown, subject to the guidelines of the Public Works department.
Mr. Ridon said the government should determine whether the equipment needed to manage moderate to severe coronavirus cases are adequate. “Expanding facilities in the public tertiary hospitals may also be explored, but this will take time given budget and space constraints for expansion,” he said.
The government should focus on expanding testing capacity since it had reached a plateau of 50,000 a day, Mr. Ridon said.
“Doubling this capacity should be a main priority,” he said. “But an inquiry should nonetheless be made on why expansion reached a plateau given massive testing is a main pillar of our coronavirus response.”
The surge in coronavirus infections has weakened the country’s healthcare system, as the use rate of intensive care unit beds reached 73% in Metro Manila. A number of hospitals have said they were no longer accepting coronavirus patients.
“The only way to prevent lockdowns is to contain the pandemic with smarter public health measures to begin with,” Mr. Africa said.