MORE job losses are expected if the Philippine economy fails to recover starting this year.
“We expect 30 percent of micro, small and medium enterprises to be permanently closed down or downsized, which means more unemployment,” Mandaue Chamber of Commerce and Industry president Steven Yu told SunStar Cebu. “We will be relying on government spending as a major source of pump priming on top of the overseas Filipino remittances, business process management and possibly mining.”
According to Yu, although the economy can withstand all the bruises, its recovery may take longer than expected.
“We are looking at 2022 to 2023 to reach pre-pandemic levels,” he said, adding that the projected timeline may be a long waiting time for others that are already struggling every day, due to the weak market sentiment, lower consumer spending activity and lack of economic aid and stimulus.
Data from the Department of Trade and Industry showed that there were about 70,227 MSMEs in Central Visayas in 2019.
Early this week, Moody’s Analytics reported that the Philippines will be the last country in Asia Pacific to recover from the recession caused by the Covid-19 pandemic.
Moody’s Analytics chief economist for the Asia Pacific Steven Cochrane said that while “much of the region will have regained all of its lost output by the end of 2021,” the Philippines along with India “will struggle to reach this benchmark by the end of 2022.”
“India and the Philippines will struggle due to their deep recessions and the uncertain fiscal support of their policymakers,” the Moody’s Analytics economist said.
Yu attributed the strong chance of being the last to recover in Asia Pacific to the level of stimulus support versus the gross domestic product where the country sits at the lower end among Asian countries.
“This also includes our being consumption-driven as an economy and the length of our lockdown, which is one of the longest in Asia,” he said.
The Philippines lagged behind its Asia Pacific peers in fiscal response to the pandemic. As of Nov. 30, it allotted only US$21.64 billion to fight the pandemic as opposed to Indonesia’s $116.33 billion Covid-19 response package and Singapore’s $89.14 billion.
Cochrane said the Philippines and India “are the least committed to fiscal stimulus despite being the hardest hit economies by the pandemic and the lengthy and strict quarantine policies.”
Moreover, Yu said, based on latest updates, the Philippines is also projected to be the last in vaccine inoculation compared to other countries like Indonesia, which is poised to start in January.
“While our macroeconomic fundamentals are solid and our finance team is formidable, we are behind on the health aspect considering that our cases are already subdued. The stimulus spending issue is related to our rating issue. We have limitations due to our structure,” he said.
The Development Budget Coordination Committee expects the country to grow 6.5 percent to 7.5 percent in 2021 and hit somewhere from eight percent to 10 percent growth in 2022. (JOB)