A panacea for recession

From big burger makers to beer giants, conglomerates are feeling the brunt of the impact of the coronavirus disease 2019 or COVID-19 on the business environment.

Jollibee Foods Corp. incurred a dizzying net loss of P12 billion in the first half of the year from a net income of P2.5 billion, while San Miguel Corp.’s losses reached P4 billion during the period, a hard landing from a net income of P26.1 billion a year ago.

These two giants are barometers of consumer spending and the economy in general. Their losses show the grim picture of our economy today – consumer spending is down and the strict quarantine measures have drastically dampened business activities.

The impact of this isn’t just on the net worth of billionaire tycoons Tony Tan Caktiong and Ramon “RSA” Ang, the honchos behind Jollibee and San Miguel, respectively.

It’s so much more than that. Their suppliers are hurting, too; some stores, as in the case of Jollibee, have closed and left people jobless; related industries are affected, including the smallest sari-sari stores selling San Miguel’s beer or gin, or corned beef or what have you.

Recession

Other conglomerates are feeling the pain, too. Ayala Land, the mammoth property arm of the country’s oldest conglomerate Ayala Corp., saw its income plunge 70 percent in the first half as construction activities ground to a halt, while its malls closed for the quarantine.

Sy-owned SM Investments first-half net income nosedived 69 percent to P7 billion, as all 74 SM malls around the country were shut down for roughly two months.

Pangilinan-led Metro Pacific Investments Corp., the tollways and infrastructure conglomerate, saw its first half income fall 38 percent for the first time ever as the quarantine reduced demand for its services, from water to power.

This is what it means to be in recession and we may see even more uncertain times ahead. I hope we will all overcome the bad times. It’s going to hurt for a while. I just hope we don’t experience again the so-called Great Recession from 2007 to 2009, which started with the United States’ housing bubble. That recession had sent shockwaves across the globe and cast a shadow over the growth of many economies.

Buy local

We should buy local now more than ever. Forget about imported products; shipments are uncertain, anyway. Let’s all buy our needs from local producers, from our brick and mortar neighborhood stores to online companies selling many essential items.

Supporting our local industries will help our fellow Filipinos keep their jobs and provide for their families’ needs. Invest in the country Companies with strong balance sheets should also continue betting on the country despite the hard times.

San Miguel, for instance, is pushing through with all its major infrastructure projects despite the crisis.

“Our commitment is to continue doing our part to help our country any way we can, including providing aid and pushing through with major investments to boost and strengthen our economy,” RSA says.

The MVP Group, too, will help the government restart the economy. “We are proceeding with needed infrastructure projects where we can,” says the big boss, Manny Pangilinan.

Bayanihan 2

A stimulus package from the government remains as crucial ever.

The Bayanihan 2 provides for a P140-billion standby fund to help the economy recover. Of this, P50 billion will be given to government financial institutions for the grant of low-interest loans to micro, small and medium enterprises, and P17 billion to displaced workers. The rest will go to other sectors in need. I hope every centavo goes to where it is really needed. But the stimulus package will not be enough. I hope banks will lend more; otherwise, Bangko Sentral Governor Ben Diokno’s heavy lifting will be useless.

The central bank has given lenders more ammunition to lend, lowering their reserve requirement by 200 basis points. Yet, total outstanding loans only rose 9.6 percent year on year to hit P8.97 trillion as of end-June, slower than the revised 11.3 percent growth in May.

Economic panacea

Saving the economy from the pandemic requires a multifaceted response.

And we must do everything we can if we are to survive this crisis, from buying local to investing more, to the state channeling money directly into businesses so they can keep people employed, to the government creating more economic activities moving forward by building roads, bridges and other big-ticket infrastructure projects.

More importantly, we have to stop the spread of COVID-19.

We now have 127,000 COVID-19 cases, the highest in the region. This shows that the quarantine measures implemented since mid-March have not been that effective without enough testing, tracing and isolation.

Sadly, we may have just killed the economy for nothing. We can’t afford to make the same mistake again.

Let’s make this “timeout” count and do everything we can to get out of recession.

May the Greek goddess of universal remedy Panacea, she with long cascading hair and unparalleled beauty, hear us, too and pour her miraculous poultice on our battered economy which is now in its first recession in 29 years.

Iris Gonzales’ email address is eyesgonzales@gmail.com. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com