THE LIGHT at the end the tunnel, so to speak, is becoming visible after millions of Filipinos groped in the dark for a few months. Some economic data are now emerging that support government’s decision to slowly reopen the nation.
The growth of Philippine exports in September, for instance, is giving us hope that economic recovery is under way as we gradually reopen our industries and allow more people to work, while making sure that strict health protocols are observed at home, in the workplace and in public areas. The peso is strengthening against the US dollar, a key indicator that assures prices will remain stable in the near-term.
The Philippines, on the other hand, is winning the fight against the pandemic given the low daily infection rate we are recording in the past few weeks. No less than the Department of Health said the whole country, including Metro Manila, may be placed under the more relaxed modified general community quarantine (MGCQ) in the first quarter of 2021, if the downtrend in active Covid-19 cases is sustained until the end of the year.
The OCTA Research Group, composed of medical experts from the University of the Philippines, University of Santo Tomas and Providence College in the United States, noted that the virus positivity rate in Metro Manila has been steadily declining to about six percent, or closer to the World Health Organization’s recommended target of five percent to contain the spread.
As the positivity rate declines and as more patients recover from the disease, the number of active cases is also expected to gradually decrease. We should aim to bring down the number of active cases from about 32,000 as of Nov. 5 and ensure that patients are isolated from the working population so that we can further increase the capacity of our factories and business establishments.
This would help us boost production and trade in the coming months, and enable us to post a strong recovery next year. The Philippine Statistics Authority said our exports grew 2.2 percent in September to $6.22 billion from $6.08 billion in the same month last year. This represented the first annual rise since February, following the relaxation of quarantine measures and increased capacity of businesses.
Total exports in the first nine months still declined 13.8 percent to $45.87 billion from $52.2 billion in the same period last year, but the September figures could signal the start of the sector’s recovery.
Total imports in the nine-month period fell 26 percent to $61.95 billion from $83.7 billion.
The sharp contraction of the nine-month imports compared to exports, however, trimmed our trade deficit this year and allowed us to have a stronger balance of payments (BOP) position, resulting in a stronger peso and higher gross international reserves. A strong peso will help us contain the inflation rate, which remained manageable at 2.5 percent in October.
The peso last week strengthened to its highest level against the US dollar in more than four years amid more stable global financial markets, and as some economies gradually reopen.
The local currency gained nine centavos to close at 48.22 per US dollar last Friday. It was its strongest finish in more than four years, or since settling at 48.19 on Oct. 24, 2016.
Remember that a big part of our food supply comes from other countries. These include rice from Vietnam and Thailand; wheat and meat products from the United States, Latin America and Europe; and milk and other dairy products from New Zealand and Australia. A stable exchange rate ensures prices of these imported products remain affordable to ordinary Filipinos. We should also support local farmers at this time to enable them to export their products, particularly virgin coconut oil, which, according to the Department of Science and Technology’s initial studies, helps boost the immune system.
By increasing our exports, we achieve a stronger position to stabilize the value of the peso and consumer prices. This is why the growth of exports in September gives us reason to be optimistic.
In the words of the National Economic and Development Authority, the improvement in the country’s trade performance in September suggests the country’s approach to gradually reopen the economy, along with the strict observance of health protocols, puts us on the right track toward economic recovery.
To sustain the growth momentum, we need to continue reopening the economy and making the necessary adjustments to protect the people from the virus. This requires a delicate balancing act that the government has masterfully achieved so far by looking at the health, employment and economic data, and making the right call.
The Department of Trade and Industry is now allowing several industries to operate at 100-percent capacity in areas under MGCQ and at 75 percent in Metro Manila and other areas under GCQ. Trade Secretary Ramon Lopez was quoted as saying the situation is getting better as we ease up the restrictions.
I appreciate the efforts of Mr. Lopez in helping businesses recover from the impact of the pandemic, making their operations COVID-proof and ensuring strict implementation of health standards to boost consumer confidence and spending. Given these health measures, Mr. Lopez says he is more confident in further opening up the economy without undermining efforts to contain the spread of COVID-19.
Filipinos have learned to adapt to COVID-19. This should bolster our conviction to reopen the economy further and give the jobs back to our workers. In doing so, we are giving them the chance to contribute to our economic recovery.
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This piece first came out in Business Mirror on Nov. 9, 2020 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
