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ELECTIONS 2022: Pandemic must be neutralized to solve growing unemployment rate, expert says

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Amid forecasts of growth for the Philippine economy, Former Bangko Sentral ng Pilipinas Deputy Governor says that the uncertainty of the COVID-19 pandemic complicates these projections. He also said that the next administration must do everything in its power to mitigate the virus so the economy may go back to its pre-pandemic growth.

Video Transcript


DIWA GUINIGUNDO: The Development Budget Coordinating Committee of the Philippine government, that which actually allows both monetary and fiscal authorities to coordinate, has projected a 7% to 9% growth in 2022 and 6% to 7% in '23, in 2023 and 2024. Now, I think it is important to clarify that these forecasts are premised on a full reopening of the Philippine economy. There are still some uncertainties-- economic scarring, possible unwinding of policy support, and of course, the uncertainty of COVID-19.

Now, that is a linear projection in the sense that should this tree start to become a problem again or pose problems to achieving those targets, then we will have to-- I think the DBCC will have to redraw its forecasts because the reopening of the economy might be affected in the process.

Those forecasts of economic growth of 7% to 9% for 2022 and 6% to 7% for 2023 and 2024 are premised on the full reopening of the Philippine economy. That will depend to a large extent on how the government will be able to achieve more massive roll out of vaccines, even booster shots, and of course, issues about oil prices and possible disruption of the value chain. These are important assumptions in those growth projections.

While the pandemic has been quite prolonged, the impact on overseas employment in the Philippines has been manageable. And the numbers prove that. In 2019, before the pandemic, our cash remittances stood at $30.1 billion. At the height of the pandemic in 2020, the level inched down to 29.9 billion. And last year, we managed to grow to $31.4 billion. So the impact was quite manageable.

The importance of cash remittances by OFWs cannot be overemphasized. It is this cash remittances that provide support to domestic consumption. And consumption as a percent of GDP is around 70%. So 70% of growth is driven partly by those cash remittances from overseas. Now, should this COVID-19 even becomes more prolonged and should more Filipinos are asked to repatriate themselves to the Philippines, there will be some impact. But because the Filipinos are everywhere, there could be some offsetting developments that could be some counterweight to those isolated instances, where Filipinos may be asked to be repatriated.

Now, the new government should be able to support our overseas Filipino workers by way of, one, providing financial support to them when they return. And it has been done in the last few years. Second, the government should also continue the current policy of providing support to business enterprises started by some of our overseas workers. and OWWA, that's Overseas Workers Welfare Administration, has been providing that kind of support. Thirdly, the government should also continue the policy of providing scholarship and training, not only to the returning residents for retooling purposes, but also to their children and their families.

Unemployment was most severe in the last two years of the pandemic because it reached double digit at some point. The latest number is actually an improvement over the last period of November 2020. November 2020 unemployment was 16.6%, and December at 16.5%. Now, we cannot overemphasize the importance of reducing unemployment because when people lose their jobs, they also lose their income. So poverty worsens and even inequality also deteriorates.

So the new government should make sure that the pandemic is neutralized to help open up fully the Philippine economy. That will create jobs. That will create more income for our people. It is when we restructure the economy, support manufacturing, agriculture, I think, these are the keys to ensuring economic recovery and reopening of the Philippine economy.

The continuity of financial policy will depend to a large extent on who wins the presidency in May 2022. For monetary and banking policies, we can be assured that the BSP will uphold its independence and fiscal autonomy. Both the Constitution and its charter guarantee that and mandate that to the central bank. On the part of our fiscal policy, the continuity of financial policy is assured because everyone knows that those policies have made a difference in ensuring the sustainability and inclusivity of economic growth.

So based on those two considerations, we can be sure that the continuity of financial policy is assured. Now, it will be further assured if the winning candidate is committed to good governance, good economy, and good politics.

Foreign investors will be focusing on the new government's commitment to good governance, integrity, continuity of public policy, good public policy, a good market-friendly political and economic environment. Those are the things that the foreign investors will be focusing on. Aside from those factors, foreign investors will be looking at the concrete plans of the new government on how to bring down our fiscal deficit to GDP ratio and our debt levels to GDP ratio. They want a concrete plan of ensuring that our fiscal situation and our debt situation are sustainable.

It is important that liberalization efforts are sustained. Liberalization can range from banking, retail, importation, and in all aspects of the economy. And that is very important because when competitive forces are unleashed, when you allow foreign investors to come in and invest in different sectors of the economy-- utilities, for example, telecommunications, retail trade-- then we get better services, better products, and better services. And I'm sure we will be seeing less of issues on interconnectivity, low signal, or no signal at all. That will translate into better delivery of services and products to the consuming public.

The new administration, again depending on who wins the May 2022 election, I think will also be committed to sustaining this liberalization efforts because nobody among them has raised issues about liberalization and the need for more competition. They have seen the value, the importance of encouraging competitive forces in the economy. They will result in better products and better services for the Filipino people.

The challenges to the new government are formidable. One, it should be able to come up with a concrete solution to the pandemic problem. Vaccination, more massive vaccination, stronger diagnostics and stronger and accessible therapies for those who are infected with the virus.

Second is a rollout of the commitment of the new government to good governance, the principles of transparency and accountability. Thirdly is a desiderata, a manifesto of his or her commitment to economic restructuring, a restructuring program that will result in greater empowerment of both big, medium, small and micro enterprises. An economic environment that is more competitive and more contestable markets.

Thirdly, about a plan with respect to the political system. What do we do with the dynasties? What do we do with the political or qualifications of candidates? And then of course, we need also to have this new government produce a plan that will address the issue of climate change and environment. In other words, these SDG goals, and then, of course, issues about the marginalized sector. How do we address the social issues of poverty and inequality? These are issues that have to be addressed, that have to be resolved, not only in the last six years, but also beyond. That's what a good government should do.

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