May 11th, 2021
The reduction in year-on-year GDP for the first quarter is unsurprising but still disappointing. The quarantines only began on March 15 last year, so quarantine versus no quarantine, the results will be a decline in output, year-on-year.
I also suspect we are undercounting some of the real economic output, since much of the formal economy has moved into more informal avenues of making a living, such as online selling. There is a certain level of personal resiliency in the Filipino that always comes ahead of our economic conditions.
That said, we cannot pass on the burden of economic recovery to the personal resiliency of our people. We need the structural environment necessary to allow people to recover. A quicker vaccine rollout is the most important economic intervention in this regard. The sooner we can vaccinate more people, the better.
In the meantime, while the health conditions for a safe reopening are not yet present, we must acknowledge the need for household relief. Protecting household incomes is our strongest bridge to the vaccine. It keeps people alive and incentivizes healthy behavior, such as staying at home and not taking unnecessary risks. This is why some form of additional support through some version of Bayanihan 3 is still necessary.
I will continue to watch out for the next quarter’s results. Coming from a depressed base last year, we should get double digit year-on-year gains. Failing to achieve this next quarter should be an unmistakable sign of the need for additional fiscal support.