Vaccines must come first

If we open up the economy more by being less strict by shifting from GCQ to MGCQ, people will eventually get used to the system

In line with the decision to keep the National Capital Region (NCR) under general community quarantine (GCQ) status, Makati City Mayor Abby Binay agreed to the need for a vaccine to further boost consumer confidence.

However, scaling back the strict quarantine measures could also condition and serve as a litmus test if people are ready to adapt to the so-called “new normal.”

“I am one of those that actually voted that we shift to MGCQ (modified GCQ). They’re always scared with the word relaxation when, in fact, it is a test whether we have adapted to the new normal,” Binay said during yesterday’s virtual dialogue of the Financial Executives Institute of the Philippines’ (FINEX).

“If we open up the economy more by being less strict by shifting from GCQ to MGCQ, people will eventually get used to the system,” she added.

While the city mayor agreed the vaccine can help boost people’s confidence to go out, she stressed that “we cannot wait forever.”

“We have to shift to MGCQ,” she said.

FINEX earlier released a statement supporting the National Economic and Development Authority’s call to further open up the economy as it will help increase mobility and allow more businesses to operate on a higher capacity.

Other private economists likewise agreed with the suggestion, while citing the need for a careful calibration and timing for the shift to MGCQ, given that easing quarantine restrictions is a tough balancing act for the government.

Some economists laid reservations to further opening up the economy as consumer confidence remains on a similar trend and that the labor market conditions have yet to see improvement.

Nicholas Mapa, senior economist at the ING Bank, said whether the government shifts to a looser quarantine measure or not, this will only have a “modest impact” on the economy.

“Moving to relax restrictions will have only a modest impact on overall spending as the more likely impediment to consumption is the lack of consumer confidence,” Mapa said.

He said the country’s gross domestic product will continue to drop in the first quarter of the year, followed by “some jaw-dropping growth figures” in the succeeding quarters owing to base effects.

“Mirroring the steep contraction of 16.9 percent in the second quarter of 2020, the bang showcased by the second quarter numbers may unfortunately gradually fade with GDP (gross domestic product) growth plateauing to a 4.7 percent expansion once base effects fade,” he explained.

“We continue to believe that growth momentum will be subdued, regardless of type of community quarantine, with consumer confidence shot with the vaccines still out of reach,” he added.