Economy to reopen slowly as Duterte cautions vs second wave

Arianne Merez, Jessica Fenol and Joel Guinto, ABS-CBN News

Posted at May 12 2020 04:21 PM

President Rodrigo Roa Duterte holds a meeting with members of the Inter-Agency Task Force on the Emerging Infectious Diseases (IATF-EID) at the Malago Clubhouse in Malacañang on May 11, 2020. Ace Morandante, Presidential Photo

MANILA -- The Philippines is set to identify businesses that can resume at limited capacity as it begins to ease pandemic lockdowns that caused the first economic contraction in 22 years, officials said Tuesday.

Select enterprises will be allowed to operate at half capacity from May 16 in Metro Manila, where the enhanced community quarantine will be eased for the first time in 2 months. The capital region accounts for roughly a third of GDP and is home to a tenth of the 100 million-plus population.

Like Metro Manila, neighboring Laguna province, home to factories and economic zones; and Cebu City, the main business center in the Visayas region, will be under "modified" ECQ. Fewer restrictions will apply in the rest of the country, under general or no quarantine.

"The easing up of the restrictions, hindi iyan ibig sabihin na wala na ang COVID, just because we allow certain people," President Rodrigo Duterte said in a taped address, aired early Tuesday.

(The easing of the restrictions, just because we allow certain people outside, it doesn't mean COVID is gone.)

"We cannot afford a second or third wave na mangyari (to happen)," he said. At noon, Malacanang released new quarantine classifications that will take effect from May 16-31.

The lockdown started on March 17, 2 months after the Philippines reported its first COVID-19 case. It forced millions to stay at home, shutting businesses, except hospitals and those involved in food and medicine.

In areas under GCQ from May 1, travel curbs were eased and malls reopened, but without free WiFi and with warmer air-conditioning to discourage loitering. In aviation, only international arrivals are allowed.

"Ang pagkakaiba po: Bubuksan natin unti-unti ang ekonomiya," Duterte's spokesman Harry Roque said in a Palace press briefing Tuesday.

(The difference is that we will slowly reopen the economy.)

COUNTING LOSSES

As of Monday, the Philippines tallied 11,086 infections, including 726 deaths and 1,999 recoveries. More than 4.19 million people have been reported to be infected globally and 285,119 have died, according to a Reuters tally.

Gross domestic product shrank by 0.2 percent in the quarter ended March, the first contraction since 1998, and officials point to a possible recession as succeeding quarters show the full effect of the lockdown.

Economic losses could reach P1.1 trillion, acting Socioeconomic Planning Secretary Karl Kendrick Chua said last week. Aviation alone lost $5 billion (P250 billion), Air Carriers Association of the Philippines Vice Chairman Roberto Lim told senators on Monday.

Finance Secretary Carlos Dominguez on Tuesday unveiled a 5-point plan to restart the economy. This includes reviving the P8-trillion "Build Build Build" infrastructure push, hiring contact-tracers, "en masse," pushing for the second tranche of tax reform, encouraging consumers to spend with a focus on food and working with Congress on a rescue package.

"Our real problem is that the people are not buying things because their incomes have gone down. We must provide them the means of buying things," Dominguez said.

"If they're not buying things, it's useless to stimulate the companies," he said.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno on Monday said a supplemental budget was needed "very badly" to help preserve jobs. It will be on top of realigned funds under the COVID-19 response law.

"Monetary policy is not the only game in town. We need a strong fiscal stimulus, what gets in the way is the absence of a supplemental budget," Diokno said.

Diokno cut the benchmark interest rate by 125 basis points so far this year, 100 of which was delivered during the lockdown. He slashed 200 basis points off banks' reserve requirement ratio, with authority to cut it by another 200 points.