Attack panic
The Economist tagged us at 6th of 66 emerging countries in financial strength. Of the five that preceded us, three are fully emerged economies: Taiwan, South Korea and Russia. We know, however, that there is no uniform experience across countries in navigating vulnerability to financial peril. The differing realities, mechanisms, priorities, safety nets inform our respective resilience and our fates.
Our own response to the recession staring us in the face mines the monetary and fiscal policy playbook. Our economic stimulus package is at a healthy P1.74 trillion at 9.1 percent of GDP. It’s not enough, however, to just pump prime. We need that multiplier. Ultimately, the cowering populace needs to be convinced not just to go back to work, if the jobs are still around, but to pull out their wallets and re-engage. It’s counterintuitive to spend when every cell in your body is screaming save. In the US, a large segment of stimulus checks were spent on food and personal care products and payment of bills. Survival mode, understandably, prevailed. Saved stimulus, however, will not ramp up demand and promote employment.
Stimulus burn rate. We have to ensure that the ayuda from the Social Amelioration Packages (SAP) to vulnerable sectors, small businesses, workers, farmers, students not only ends up in the right pockets (which hasn’t always happened) but that the same leave those pockets to be reinjected into the sapped economy. ADB’s prescription is to restore disrupted supply chains, rehire workers and restart businesses. The resurrection of construction, manufacturing and other sectors, even of Lazarus, will be an easier job than reinvigorating consumer services.
We can take a page from Japan which is subsidizing travel to revive tourism (arrivals dropped 99 percent in April). Japan leads the world in size of economic relief efforts. They approved last April a fiscal stimulus package, including the travel stimulus, of 117 trillion yen. This was 21.1 percent of GDP. Just this Wednesday, they approved another 117 Trillion yen taking total pandemic spending to 42 percent of GDP.
Tourism is also one of the drivers of our economy. The same is expected to stay depressed until at least mid 2021, until development of a vaccine. In all ASEAN, the Philippines, followed by Thailand, stands to lose the most from the sector’s decline. Secretary Berna Romulo Puyat is on the right track with her Tourism Response and Recovery Plan and the revival of domestic tourism to select areas, but short of actual Japan style subsidies.
At the malls, it is only the drug stores, food take outs and maybe hardware and IT outlets doing business. The shops are barren. Not even window shopping. With the economy in a coma, can panic surrender to trust? We need to find that voice to help us believe. In the US after the great depression, that voice was Franklin D. Roosevelt and his Welfare State disguised as the “New Deal.” In the bastion of free market capitalism – he reversed the Grover Cleveland limited government dictum that “though people support government, government should not support the people.” Famously, FDR said the only thing we have to fear is fear itself. But who will wield the baton? Economic managers are one in saying that our macroeconomic fundamentals are sound and that we will have the resilience to ride out this pandemic from a position of financial strength.
Yet we’ve been playing catch up from day one. Enhanced Community Quarantine is like chemotherapy which attacks both healthy and unhealthy cells. In the lives vs. livelihood debate, the strong medicine of lockdown against COVID-19 bought time at the cost of a healthy economy. Both policy interventions are time sensitive: medically, contain the infection rate before an irretrievable resurgence; economically, rescue before it spirals down uncontrollably. Given our numbers, we are losing in the first. Are we in time for the second?
Invoking financial strength is pyrrhic if we can’t manage the costly governance lapses. Delays in intervention measures, testing, lab results, SAP distribution, OFW repatriation, etc. – we have to shorten the learning curves.
Monday will be the first of what is bound to be more than one re-openings. We live 15 days at a time. Expectations of relapse or second waves will keep policy makers on their toes.
The next frontier. The returning OFW problem has been emblematic of the persisting necessity to locate more efficient responses. 42,000 more are expected to return in the next two months. According to Local Governments Sec. Año, the likely figure is 300,000 for the year.
It was supposed to be all covered: hotels, shipping vessels as quarantine quarters – a welcoming hand for returning heroes. But testing, quarantine and transportation home hasn’t proved a smooth transition. The main culprit again is the testing which Health Sec. Duque concedes to be our No. 1 weakness. Imagine, an initial rapid test was followed by 14 days in quarantine. After that a swab RIT-PCR test which, despite the increase in testing capacity, still took anywhere from four days to forever.
And then, despite the combined efforts of the Maritime Industry Authority, licensed manning agencies, OWWA, Philippine Coast Guard, Philippine Ports Authority, and the Department of Transportation for their return home, there was the spectacle of OFWs bound for Visayas and Mindanao being dropped off at bus stations instead of the airports, and other myriad fumbles. The latest challenge faced is the resistance of some of their home LGUs to take them back. Its eerily like the unwanted refugees scenarios playing out all over the world. The President has had to whip out his patented PRRD ultimatum to make sure the balance of this batch get home without further ado.
The first 24,000 unceremoniously served as fodder for practice. IATF’s Gen. Carlito Galvez has already reported that our quarantining capacity for arrivals from abroad will be overwhelmed. Let’s hope that lessons learned moving forward forestalls a repeat performance for the exponentially expanding rounds of returning expatriates.