Economic slowdown to worsen with COVID-19 lockdown

Bong Bautista makes candles and figurines for a living. With the lockdown, he is unable to sell his products and at the same time buy raw materials to be used in making his products. He is one of the millions of Filipinos who lost their source of income because of the militaristic solution of the government on the COVID-19 crisis. (Photo by Ritche T. Salgado / Bulatlat)

“During an intense crisis, the economic policies that should be implemented are those that are pro-people.”

By RITCHE T. SALGADO
Bulatlat.com

MANILA — When the enhanced community quarantine took effect in Manila on March 15, many of the metropolitan’s informal workers immediately felt the effect, as they see their income slowly disappearing.

Informal workers are those whose daily subsistence is dependent on their daily income such as pedicab (bicycle taxi) drivers, street vendors, and even construction workers and sales persons in small businesses.

Bong Bautista, who makes candles and figurines for sale, said that as soon as the ECQ was imposed, they could no longer sell their products, so much more be able to buy raw materials for their products.

The worse part, he said, was that assistance promised by the government was non-existent.

Bautista related that he went to the barangay to inquire of the Tulong Panghanapbuhay sa Ating Displaced/Disadvantaged Workers Program (TUPAD) which Labor Secretary Silvestro Bello III has been brandishing during the press conferences of the Inter-Agency Task Force for the Management of Emerging Infectious Disease (IATF-EID).

“Bello said that those who lost their jobs would be hired for a minimum of 10 days and all we have to do was to go to the barangay to apply for it,” he said, “but the barangay does not know anything about it.”

While many are already experiencing the negative effects of the ECQ, Jose Enrique Africa, executive director of independent think-tank IBON Foundation, believes that the worst is yet to happen after the ECQ as the global economy would be facing a recession.

Africa, citing International Monetary Fund’s prediction, said it would be “at least as bad as during the global financial crisis or worse.”

Militaristic response could worsen economy

Africa believes that with the militaristic response of government on the COVID-19 pandemic crisis, the country could experience an economic crisis that could be worse than the 1997 Asian financial crisis or the 2007 global financial crisis.

In an online forum hosted by ACT for People’s Health (ACT-PH) and Congress of Teachers for Nationalism and Democracy (CONTEND), Africa said that while these two crises did not significantly affect the country, the current COVID-19 pandemic could result in a global economic crisis that would drastically affect the country, especially its poor population.

The lockdown of Metro Manila alone disrupted 50 percent of the country’s economic activity, and with Luzon accounting for 73 percent of the country’s economic activity, Africa said. He added that 23.7 million workers have been displaced, majority of whom are in the informal sector like vendors, construction workers, farmers, and in the transport sectors.

He predicts that the global recession would result in weaker overseas remittances and sectors like business process outsourcing, tourism, and export manufacturing would be affected by the protectionist policies that other countries are starting to impose.

Given the current situation, what would be the right solution that the government should pursue?

Africa said the government should already let go of the “free market” concept, which he said is no longer being supported by large economies.

“Even before the COVID-19 pandemic, protectionism has been gaining ground in other countries like France, Brazil, India, and China,” said Africa.

“During an intense crisis, the economic policies that should be implemented are those that are pro-people,” he said.

He emphasized that even before the COVID-19 crisis started, the country was already experiencing an economic slowdown.

“With the COVID-19 crisis, it is assured that the economy would fall, but how fast?” he said.

As per estimate from the National Economic Development Authority (NEDA) the country could have a 4.3 percent growth, which Africa noted is the slowest economic growth in 12 years. Or, as per NEDA data, it could experience a -0.6 percent growth which is far worse than during the Asian economic crisis.

Pulling the economy back

“The challenge now is how we could pull our economy back or even to improve from the state which we left (before the COVID-19 crisis),” he said.

“Infrastructure projects would no longer be viable,” he pointed out, that is why government should stop insisting on pursuing such projects, instead, he suggests that money for infrastructure projects should be used for relief measures.

IBON estimates that to ensure the protection of vulnerable Filipinos and ensure a minimum level of welfare for all, a total of P296.2 billion is needed monthly. This would be broken down to the following:

– P15 billion as emergency relief package for the poorest five million families
– P100 billion for unconditional cash transfers for the poorest ten million families
– P53.5 billion for wage subsidies for 10.7 million workers in formal establishments
– P26 billion for financial assistance to 5.2 million informal earners
– P97 billion financial assistance for farmers and fisherfolks
– P3.8 billion emergency support for the 3.8 million indigent senior citizens
– P900 million emergency support for the 1.8 million SSS and GSIS pensioners.

Africa added that price controls should be put in place as well as moratoriums on utilities, lease rentals, and debts, and for no demolitions to happen while providing shelter for all.

However, instead of pursuing similar economic solutions to the COVID-19 problem, the Duterte administration instead recycled the existing budget into the P27.1 billion COVID-19 response package and the emergency powers granted to the president through RA 11469 or the Bayanihan to Heal as One Act, whose provisions for relief are “insufficient and ambiguous.”

He believes that because of this crisis we would see the biggest number of job losses, as according to NEDA estimates, would be around 116,000 to 1.8 million.

For the meantime, Bautista’s outlook after the quarantine is bleak.

“I expect tons of bills – water, electricity and others – not to mention debts incurred during the quarantine when we have no income,” he said, and he is not expecting that government would do something to ease their burdens.()

Share This Post