Why we dare to hope

Published May 5, 2020, 12:00 AM

by manilabulletin_admin


John Tria
John Tria

Yes, it may not sound appropriate to feel hopeful for some at this time of the COVID-19 pandemic, but as the rate of new infection is now lower than the rate of recoveries, some hope springs just like the vegetable seeds I planted in my backyard porch.

After several weeks, the feared peso devaluation, bank run and food shortages have not happened. It looks like our economic fundamentals remain strong, and a major economics publication recognizes the Philippines with top rankings in managing the economy, particularly the management of our debt – a key measure being taken and compared with the same levels as other countries especially with many spending to fight COVID.

Likewise, we achieved the highest level of dollar reserves last March at $89 billion, which is worth about 9 months of exports and 5 times our foreign debt. Will these foreign exchange reserves increase as oil prices fall to historic lows? Perhaps.

We hope that these developments will keep our credit ratings at BBB+, or investment grade – vital for financial recovery from the 2020 losses, as the high rating can mean lower interest rates for Filipino borrowers.

Our economic managers have thus far done much to keep things stable, and that includes policies to keep consumption, which is almost three fourths of our economic activity, active.

Note how 70% of the 352 billion in funds so far have been allocated to direct cash transfers for people like social amelioration and workers subsidies and food purchases. This is spent in local economies and drives local business especially that of food production and trade.

Recently, the decision of the Department of Finance to issue DC 002-2020 extending payment deadlines of LGUs taxes and fees to June 25 gives an additional breather in expenses and allows more money to be spent in local economies.

Its time to plan for recovery. Where may it start? How can it expand?

For one, we have 1.2 million BPO workers and this number may increase after enhanced quarantines are lifted and new normal emerge.

That increase can happen if in country markets for locally made software products and services emerge, and if internet connectivity is boosted.

This innovation and connectivity will be critical if our IT-BPO sector, if as opined by experts, will flourish as a destination of companies seeking lower costs to keep them competitive in a depressed global economy.

An area of hope is that the cost of private education may reduce, if schools embrace online education tools to connect with their students, or provide online courses and seminars to a larger paying public to offset the costs of training other students. Online education is cheaper to run because you do away with some physical costs and electricity charges. The IT BPO sector can find clients here.

Another area is helping find solutions for work from home arrangements which will continue for many businesses, that may, in turn, see lower costs since electric consumption will fall.

For Mindanao, its ability to produce and distribute food is critical for the country’s survival. It produces 40% of our food and will likely increase as the Department of Agriculture engages in food logistics as it has done for our local pork and chicken producers, and expands support provided for farms, which have become important components of our economy. Moving forward we need to keep food costs low for the public. Will we see and agricultural renaissance stemming from these new investments and the attention it is attracting from the public? Perhaps.
These are why we dare to hope.

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