What else to possibly expect in 2022

APart 3 of a series

FTER a terrible 2020, people looked forward to 2021 with a lot of hope. Obviously, 2021 fell short of expectations, although it wasn’t as bad as 2020. Will 2022 be truly better than 2021, or will it just be another 2020-too?

The start of 2022 still looks a lot like 2021 in the Philippines — lots of uncertainty, increasing number of confirmed Covid-19 cases, more jobless Filipinos, and increasing but somehow controlled prices of basic commodities.

Bloomberg Opinion columnist Mark Gongloff put together some bold predictions from a number of observers. Experts predict that in 2022, Big Tech will be more regulated (Parmy Olson), manufacturers will enter a new stage of recovery (Brooke Sutherland), and it will be a critical year for the climate (David Fickling). 2022 will be a big year for digital money or cryptocurrency (Andy Mukherjee), the euro will have an awkward birthday (Lionel Laurent), and financial reformers will be busy in 2022 (Paul J. Davies).

The 2022 economy

On Dec. 14, 2021, before the current sudden spike in Covid-19 single-day cases, the Asian Development Bank (ADB) “raised its growth forecast of the Philippine economy in 2022, owing to a heightened Covid-19 vaccination program and a plunge in new cases” to as low as 168 on December 21. At this writing, however, there are 33,169 reported single-day cases, not counting data from 10 sources who failed to submit the data on time.

ADB Philippines Country Director Kelly Bird said, “The Philippine economy has shown impressive resilience.” For 2022, the ADB estimated that “gross domestic product (GDP) is expected to rise by 6 percent from the previous projection of 5.5 percent, but still below the government’s 7 to 9 percent growth goal.”

Jenina Ibanez wrote in the Business World online, “The ADB reduced its growth forecast for developing Asia to…5.3 percent (from 5.4 percent) in 2022, amid uncertainty brought by the emergence of the Omicron variant.

The ADB confirms this observation: “The main risk to the outlook remains a resurgence in Covid-19 cases. Recent developments in Europe show that extensive virus outbreaks can occur even in highly vaccinated countries and force governments to retighten mobility restrictions. The emergence of the highly mutated Omicron variant brings additional uncertainty. As it appears to be significantly more transmissible than earlier variants, its economic impact could be substantial.”

On the other hand, Moody’s Analytics said the global outlook is now “less exuberant as the Omicron variant increases uncertainty in the near term, although the recovery momentum was unlikely to be derailed.”

Just a few days after the ADB’s and Moody’s pronouncements of a better economic outlook in 2022, the Philippine government imposed the Covid-19 Alert Level 3, which further limited mobility, human traffic and economic activity. It must be recalled that the government earlier downgraded the Alert Level 3 to Alert Level 2 on Nov. 5, 2021. The NEDA estimated that this positive move would increase GDP by P3.6 billion every week, as well as create 16,000 new jobs. On Jan. 3, 2022, the government had to protect the health of its citizens by reverting to Alert Level 3. This move will likely adversely affect the GDP and employment for tens (if not hundreds) of thousands of Filipinos.

Early job losses

The upgrading to Alert Level 3 will not only affect businessmen. It will be more devastating to the workers.

Business Mirror’s Jasper Arcalas wrote on January 10, “Trade Secretary Ramon Lopez told reporters that malls and other establishments have begun slowing down operations…following Alert Level 3 in the National Capital Region (NCR),” which capped indoor capacity for fully vaccinated at 30 percent in establishments allowed to open. While the DTI has not fully determined the impact of the limited capacity and mobility under Alert Level 3, Lopez estimates, “It will only have a minimal effect due to continued operations of several sectors… and further adoption of workfrom-home arrangements amid the recent Covid-19 surge.”

Management Association of the Philippines (MAP) President Alfredo Pascual said that the surge in Covid-19 cases “will set back the business sector and the workers who will lose their jobs.”

My friend George Barcelon, speaking on behalf of the Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Confederation of Exporters Inc. (Philexport), said, “Businesses are cautious, but show some optimism. The economy was showing signs of improvement, and during the last six months, concerns were mostly confined to the supply chain.” Barcelon added, “In general, this is an election year, and you have to extrapolate the additional campaign spending that will boost up the economy.”

Makati Business Club (MBC) Executive Director Francisco “Coco” Alcuaz Jr. describes the current situation as a setback to the business sector that has recently regained some footing after strict lockdowns. He said, “After a strong yearend, we had momentum to accelerate recovery. Now many businesses are down again, with some closing temporarily.”

When businesses close, workers lose their jobs. Coco and I, together with a few other friends, had long been discussing the possibility of instituting some social protection mechanisms for businesses and employees during crisis situations. I’m sure we don’t have to reinvent the wheel. He said in a recent interview with Business Mirror, “We should also seriously consider wage support and unemployment insurance to help make companies and employees whole during periods like these, to preserve jobs and ensure that people have the basics….”

I don’t think we have to choose between saving lives or saving livelihoods. They are both important to lose, and all of society and all of the country must work together to ensure that Filipinos have both.

Milton Friedman is a foremost American economist and statistician who was awarded the 1976 Nobel Memorial Prize in Economic Sciences. Speaking about the great depression in the US, he said, “The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement, rather than by any inherent instability of the private economy.”

I’m tempted to paraphrase something attributed to former US President Harry Truman, “Recession is when you see your friends and neighbors lose their jobs. Depression is when you lose your job.”

Ernie Cecilia is the chairman of the Human Capital Committee and the Publication Committee of the American Chamber of Commerce of the Philippines (AmCham); cochairman of the Employers Confederation of the Philippines’ (ECOP’s) TWG on Labor Policy and Social Issues; and past president of the People Management Association of the Philippines (PMAP). He can be reached at erniececilia@gmail.com