AT THE rate the government is addressing the Covid-19 pandemic, economist Bernardo Villegas thinks the Philippines will be left behind in terms of economic recovery.
“If we are to consider economic development as a race, a sprint in 2021, the Philippines will be left behind by practically all of its neighbors. We are not going to recover that quickly this year because of the way we have not managed very well the Covid-19 pandemic in comparison with Singapore, Vietnam etc.,” said Villegas during the Asia CEO Online Forum on Thursday, Jan. 21, 2021.
Villegas, who is also a professor at the University of Asia and the Pacific, projected that the Philippine economy will grow only four percent this year.
“I don’t expect the growth for 2021 to exceed four percent, although others are optimistic to say six to eight percent. I think that in the first semester we will continue to have a lot of uncertainties—second, third wave of the variant,” he said.
The Development Budget Coordination Committee earlier pegged the country’s gross domestic product to settle between 6.5 percent and 7.5 percent and to hit somewhere between eight percent and 10 percent in 2022.
Because of this, the economist suggested that business owners should make use of 2021 to make the necessary adjustments to the new reality until 2022.
Invest in technology
Villegas said business owners need to continue fine-tuning their businesses and making use of the available technology and infrastructure and to upskill/reskill abilities to stay in the game.
He noted that every industry will be dependent on technology.
He sees blended learning and work-from-home schemes continuing and even the growing trend of online shopping and deliveries.
“Dining will not go back to the way it was. People will continue to order online and will resort to takeouts,” he said.
This new trend, according to Villegas, opens opportunities in upgrading every sector’s supply chain management, from delivery to warehouses.
Meanwhile, inflation will take a pause in 2021, according to Villegas.
He said inflation will be kept close to two percent, which means that the purchasing power of consumers will not be challenged.
The Bangko Sentral ng Pilipinas has forecast inflation to average at 3.2 percent for 2021 and 2.9 percent for 2022.
“The forecast revision for 2021 was due largely to the higher-than-expected inflation outturn in the fourth quarter of 2020 and the sharp uptick in global crude oil prices. Meanwhile, the forecast for 2022 was broadly unchanged compared to the previous round,” the central bank said in its latest inflation report.
The country’s average inflation rate for 2020 settled at 2.6 percent, only slightly higher than the 2.5 percent in 2019 and well within the two to four percent inflation target range of the government for the year.
Villegas said overseas Filipinos’ remittances will continue to be a major source of purchasing power this year.
He noted that amid the 300,000 repatriated overseas Filipino workers in 2020, the decline of the overseas remittances was less than one percent last year, which was almost the same level in 2019.
Money sent home by overseas Filipinos in 2019 reached a record high of US$33.5 billion in 2019, 3.9 percent higher than that of 2018.
“I see this area as very optimistic,” said Villegas. “In fact, Germany and Japan have already sent language tutors to the Philippines to teach our teachers, nurses and caregivers the German and Japanese languages, ready to import our workers this year.”
Villegas also sees healthy spending in the health and maintenance sectors this year.
He said government and the private sectors’ expenditures will be channeled to keeping the population healthy in both the preventive and curative aspects.
The economist also sees an innovation taking place in the education sector. He said many Filipinos will get new skills this year.
“Many will enroll in short-term courses to add to their skills that will keep them employable,” Villegas said.