A year ago today, we were preoccupied by the eruption of Taal Volcano and news about a new virus from Wuhan, China. Two months later, due to Covid-19, we were in lockdown. By the end of 2020, a total of 474,064 Covid-19 cases were recorded in the country with 9,244 fatalities.
Gross domestic product (GDP) for 2020 is estimated to be a negative 8.5 to 9.5 percent. Practically all sectors of the economy have been badly hit.
The unemployment rate as of October 2020 was 8.7 percent, translating into roughly 3.8 million Filipinos aged 15 and above without a job. OFW (overseas Filipino worker) deployment was estimated to have dropped by over 60 percent last year.
The availability of vaccines all over the world will result in a worldwide economic recovery which the Philippines will also be expected to benefit from.
We have started this New Year with good news. There are already three Covid-19 vaccines given emergency use authorization by major health regulatory agencies. The UK Medicines & Healthcare Products Regulatory Agency has approved the Pfizer-BioNTech, Oxford-AstraZeneca and Moderna vaccines while the US Food and Drug Administration has approved the Pfizer-BioNTech and Moderna ones.
Both the government and the private sector have closed or are negotiating deals for roughly 150 million vaccine doses for the year. It is, however, the closing of the contracts for the vaccine and the rollout and administration of such that will really be crucial to determining the health and safety of the population and the consequent impact on the national economy.
It would be unrealistic to believe that we can roll out and administer the vaccine to 110 million Filipinos by the end of this year. However, we can reasonably expect that a good number would have been vaccinated by the second half of this year, which would erase a significant amount of the present fear of the virus, eventually resulting in a substantial increase in economic activity. With a good rollout of the vaccine, the economy is forecast to rebound to a growth level of 5 to 7.5 percent this year.
Two major factors that will increase economic activity this year are the economic recovery measures of the government and the preparations for the May 2022 presidential, national and local elections.
The national budget for 2021 totals P4.506 trillion. It is themed “Reset, Rebound and Recover: Investing for Resiliency and Sustainability.” It is supposed to make the economy “rebound by boosting infrastructure development… generating job opportunities, and rebuild by assisting communities adapt to the post-pandemic life.” The government’s flagship “Build, Build, Build” program can be expected to be pursued with vigor.
Aside from the national budget are the budgets of the local government units (LGU) — 81 provinces, 146 cities, 1,488 municipalities and 42,046 barangays. The total funds that will be expended by LGU for Covid-19 protective and recovery measures, and for infrastructure will be considerable.
The second major factor to consider is the May 2022 elections because preparations for the polls are never done in the election year itself. Preparations are always at the very least a year ahead.
The filing of the certificates of candidacy will actually be in the last quarter of this year. Thus, it is a given that a considerable amount of spending for such will be undertaken as early as this year.
As for private sector investment and spending, this can definitely be expected to increase in 2021. The projects that were slowed down or were held in abeyance in 2020 due to the lockdowns and the absence of a vaccine are expected to be implemented and sped up as soon as practicable.
The availability of vaccines all over the world will result in a worldwide economic recovery which the Philippines will also be expected to benefit from. OFW deployment can be expected to once again go up. It is also projected that foreign direct investments can reach up to $7 billion in 2021.
Finally, we have to consider the positive multiplier effect of all of the preceding on our GDP. Though, we cannot expect a return to a pre-Covid-19 economy within the year, it will definitely be rebounding strongly.
We start our New Year with considerable hope and good prospects.