Need to assist poor and vulnerable sectors a requirement to recover
Social assistance to poor families a must, says World Bank
MANILA – The needed social assistance to underprivileged and vulnerable families and micro and small enterprises will help address the impact of COVID-19 and accelerate recovery in the Philippines. This was according to World Bank’s October 2020 Economic Update for East Asia and the pacific entitled From Containment to Recovery, released today at 10:00 A.M.
The report forecasts the Philippine economy to shrink by 6.9 percent in 2020 before recovering to 5.3 percent in 2021 and 5.6 percent in 2022, described as a drawn-out process that could slow down the country’s rapid progress in poverty reduction in recent years.
World Bank. Noted the Philippines’ economic growth which averaged 6.6 percent from 2015 to 2019, resulting from prudent macro-fiscal management, substantial investments in infrastructure and human capital and favorable external conditions.
In a statement, World Bank said the robust growth in household incomes reduced the national poverty rate from 23.5 percent in 2015 to 16.7 percent in 2018.
The COVID-19 shock has pushed the economy to recession and threatens economic and social gains. It has also resulted in declines in remittances sent by Filipino overseas workers and job losses due to strict containment measures.
To recover from the pandemic would require effective public health management and social protection measures in the immediate and resuming the government’s strong emphasis on human capital investments and infrastructure that has been the foundation for the country’s successful growth before COVID-19 struck.
“In the short term, every peso put directly in the hands of poor and vulnerable families through social assistance translates into demand for basic goods and services in local communities,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand. She credited the Philippines for the improvements in public health management including testing, tracing, isolating and treatment to effectively control the spread of COVID-19 as well as secure a definitive recovery.
Diop said investments in infrastructure of social services and assistance delivery, the foundational identification system, digital mobile access and transaction accounts will help ensure that social protection measures directly reach poor and vulnerable families when they need it.
The economy’s contraction from 5.6 percent growth to -9 percent, said to be the largest since 1985, was due to the implementation of strict quarantine measures including restrictions on mobility, work-from-home arrangements and closures of workplaces of workplaces that blocked economic activities. Philippine exports and imports also weakened as international trade slumped, upended by massive disruptions in global value chains.
World Bank Senior Economist Rong Qian said the economy is expected to improve to 5.3 percent next year and 5.6 percent in 2022. The project assumes that the country successfully manages COVID-19 transmission or that no major spies in cases lead to further lockdowns.
She said businesses and households regain confidence and the government continues the roll out its infrastructure program. Base effects or the numbers tending to be high because it is coming from a negative base, will prop up growth in 2021 while the scheduled national elections in May 2022 will boost activities in the latter half of 2021 until 2022.
Qian said in the medium term, sustaining public infrastructure spending agenda will support economic recovery while addressing long-standing infrastructure gaps in the country.
“Accelerating structural reforms to improve the business environment, foster competition, and boost productivity growth can enhance inclusive growth. For instance, reforms in still-protective sector to take advantage of emerging digital opportunities,” Qian concluded. (Melo M. Acuña)