2021 Looks Auspicious
A series of good news greeted 2021. The government is making progress in arranging supply agreements with top vaccine makers. It has managed to contain Covid-19 cases in the country despite the recent holidays that reunited many of us with our families. And the Philippines continues to enjoy the goodwill of foreign creditors after receiving a stable credit rating from a major debt-rating agency.
Such developments were much better than the start of 2020 when we witnessed the wrath of Taal Volcano, whose erratic activity disrupted the vibrant economy of Calabarzon. Thick ashes blanketed parts of Cavite, Batangas and Laguna provinces, and Metro Manila in January last year. Then came the news that an unknown virus was causing people to fall sick in China. It was not long after that Covid-19 became the biggest threat to civilization in 2020 and reached almost every nation on Earth. That was last year.
There are signs we are making a gradual recovery from the deep gross domestic product contraction in the second and third quarters of 2020. Merchandise exports, for example, grew 3 percent in November 2020, the highest year-on-year increase since March 2020, when the country began imposing restrictions due to the pandemic.
A full recovery, however, will only happen if we address the health crisis—the root cause of the problem. I am happy to note that the national government has secured supply deals for millions of Covid-19 vaccines from the likes of Pfizer-BioNTech, AstraZeneca, Sinovac, Serum Institute, and the COVAX Facility of the World Health Organization.
Local government units, especially in Metro Manila, deserve to be recognized for initiating to secure vaccine supplies on their own for free distribution to their residents. This means the national government can distribute the vaccines to less progressive towns in the country that do not have the capability or the funds to purchase them.
Some of the vaccines are expected to arrive in the second quarter, but most of them will come in the second half of 2021 until the early part of 2022. The government’s goal is to inoculate most of the population as fast as it can so we can achieve herd immunity or the stage where the virus is no longer a threat to the population.
It might be a lengthy and arduous process, but at least it gives us hope that there is light at the end of the tunnel. While we are waiting for herd immunity to happen, our economy is raring to bounce back with full force, especially as the development of infrastructure projects continues.
Last week’s opening of Skyway Stage 3, one of the major infrastructure projects of the Department of Public Works and Highways, in collaboration with the private sector, is a welcome development this year insofar as decongesting Edsa and other major roads in Metro Manila is concerned.
This means more areas in the north—such as Bulacan and Pampanga—and Laguna and Cavite in the south will attract more and more investors, especially now that commuting to these areas takes only about an hour from Metro Manila.
I am not alone in expressing optimism about the economy. A recent survey by the Social Weather Stations shows that 42 percent of Filipinos now expect the economy to be in better shape in the next 12 months. Foreign analysts also took notice of local developments.
International debt watcher Fitch Ratings kept the Philippines’s investment-grade credit rating of “BBB” with a “stable” outlook on the back of favorable growth prospects, a manageable fiscal situation despite the Covid-19 crisis, and the government’s vaccination plan.
The debt-rating agency has noted the country’s declining infection rate. The drop, said Fitch, is a reflection of “an effective government response to the crisis,” adding this reduces the risk of renewed lockdowns.
The government has spent P2.66 trillion, or 14.7 percent of the GDP, as its direct response to address the pandemic, including the largest social protection program in history that provided emergency cash grants to low-income families and wage subsidies to workers in small businesses.
Other factors working in favor of the Philippines are the rising gross international reserves, which reached a record $109.8 billion at the end of 2020. The level is equivalent to 11.7 months of imports and other external payments, or way above the international standards of just three months.
I am confident the Philippines will report more positive economic data in the coming weeks that will justify the further reopening of the economy. Declaring widespread lockdowns as we have experienced in the past is no longer an option. They do more harm than good to the economy.