No sign of recovery in horizon

THERE is no sign yet of recovery in the near future as the government tries to grapple with the debilitating effects of the coronavirus disease 2019 (COVID-19).

Acting Socioeconomic Secretary Kendrick Chua made the gloomy outlook amid efforts by authorities to gradually ease quarantine restrictions and slowly reopen the economy.

The government is contemplating on further relaxing the grip on business operations and social mobility for a speedy recovery.

However, cases of COVID-19 and the number of deaths attributed to the disease alarmingly jumped early this month as establishments of selected industries opened and many returned to work under the quite tolerable General Community Quarantine (GCQ).

Despite the GCQ,  Chua expects the gross domestic product (GDP) for the second quarter to  be “worse” than the first quarter.

“Recovery is very uncertain,” Chua said.

As this developed, a study by UK-based think tank Oxford Economics said the Philippine economy could contract by five percent this year due to the extent of lockdowns and the impact on tourism.

The economic research firm said the coronavirus pandemic delivers the largest shock to the five largest economies in the ASEAN region—Philippines, Indonesia, Malaysia, Thailand, Singapore--since the 1997 Asian financial crisis.

Declines in economic output is seen to be steeper in the Philippines (-5.0 percent), Thailand (-5.7 percent) and Singapore (-6.0 percent).

“On the domestic front, countries with more stringent lockdowns and a higher share of discretionary spending are likely to take a heavier toll. On the external front, a heavily trade-dependent economy such as Singapore and economies with large tourism sectors, notably Philippines and Thailand, will be hard hit,” the study said.
While the policy responses in these economies have been strong, the room for further rate cuts is narrow for some due to financial risks, it added.

The firm pointed out that “progress in virus containment and policy space will influence the speed of economic rebound.

Meanwhile, Chua remained confident on the  economy’s capacity to survive. He said it can have clearer direction if the government will proactively implement the recovery program it started and the 18 million poor families get support to receive social amelioration and 3.4 million small business employees get their wage subsidy.

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A group recently urged the Department of Transportation (DOTr) to raise the subsidy for  jeepney modernization to P500,000.

That subsidy level for the surrender of an old jeepney and financing of a new vehicle can  accelerate the implementation of the modernization program, according to transport coalition MoveAsOne.

It can also place the new public transport services on a more sustainable footing,” Robert Siy, the group’s transport economist said.

However, the amount is P340,000 higher from what the government is willing to subsidize. The DOTr earlier hiked the subsidy from P80,000 to P160,000.

The increase was in response to the higher price of modernized vehicles now pegged at P2.4 million from P1.6 million per unit, the transport agency said.

To acquire the ‘upgraded jeepneys’, drivers can seek loans at LandBank but they need an equity to which the subsidy or cash grant could be applied for.

Jeepney drivers and operators have been called by the government to support the modernization program to provide better mode of public transportation.

The program will replace old jeepneys with their brand new counterparts boasting of cashless payment system, GPS tracking device, and machines powered by environment-friendly fuels.

Of the around 280,000 jeepney drivers in the country, more than half of them are supporting the  campaign. The rest could be silent or opposing the program which is one of the administration’s flagship programs.

Meanwhile, drivers in Metro Manila were disappointed by the continuing ban on jeepneys to serve the public amid restrictions aimed at controlling the spread of COVID-19.

They expressed fears the pandemic is being used to completely phase out the jeepneys which could deny their only source of livelihood.

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