Allow me to start by sharing with readers excerpts from a note that Christine Tang and I wrote for subscribers of GlobalSource Partners (GSP, globalsourcepartners.com) on May 11 on the grim first quarter GDP performance.
(GSP is a New York-based network of independent analysts providing macro, financial and political outlook in emerging market economies.)
鈥淭he on-the-ground feedback we were getting of the economy鈥檚 performance leading up to today鈥檚 (May 11) GDP announcement had suggested a more buoyant economy than the reported 4.2% year-on-year (yoy) contraction. The headline number implies that GDP grew by only 0.3% quarter on quarter, or an annualized rate of just a little over 1%, at a time when lockdown restrictions had become much less stringent (for the first 10 of the 12-week quarter)…
鈥淭he re-imposition of strict lockdown measures from the last week of March to date, with any lifting of restrictions later this month likely to be done cautiously, implies we will likely suffer sequential quarter-on-quarter decline in 2Q output (although the yoy growth clip will be high due to base effects). Economic managers* are pinning [their] hopes of recovering lockdown losses and reaching government鈥檚 6.5-7.5% growth target on: a.) major relaxation of quarantine policies through improving health resources and automating contact tracing, b.) fully implementing the available budgetary resources, and c.) accelerating the vaccination program.
鈥淲e think the first will be difficult following the detection locally of the more transmissible 鈥榙ouble mutant鈥 COVID-19 variant first found in India and continuing weaknesses in contact tracing efforts. The second would definitely help but may require additional budgetary action by Congress under the Bayanihan III, especially in the form of direct cash transfers to the poor. The third, despite benefiting from the private sector鈥檚 technical assistance and mentoring at the local government levels, remains clouded by uncertainties surrounding vaccine deliveries and their efficacy against the new variants.聽
鈥淲e had previously capped this year鈥檚 GDP growth rate at a relatively pessimistic 5%, a number that looks rather high now given unknown course of wild card mutant varieties and possible future on and off lockdowns. In the event, we cannot rule out a flattish growth scenario.鈥
On May 12, a day later, I attended a public-private forum on the vaccination roll out with over 700 participants from business and civil society present. This was masterfully organized and moderated by Philippine Disaster Resiliency Foundation (PDRF) Chief Resiliency Officer Bill Luz. On the basis of the presentations and discussions, I now think we have a fighting chance of achieving some form of 鈥渉erd immunity,鈥 at least in the National Capital Region (NCR), by year end. This will make economic outcomes in 2022 much brighter.
My takeaways:
1.) Per National Task Force Chief Implementor Charlie Galvez, there is now greater certainty over the arrivals of vaccines. Some 7.5 million doses have arrived, and ramping up very quickly as we get to the 鈥-ber鈥 months so that we expect to have enough to fully inoculate 70% of the NCR population towards yearend.
2.) Planning and execution are being done down to city and barangay levels for the NCR, from master listing to deployment to vaccination with the technical assistance of the private sector experts in supply chain management, superbly led by Jollibee Foods Corp. Chief Corporate Sustainability and Public Affairs Officer Jos茅 Mi帽ana.
3.) As enough vaccines come to cover health workers and the vulnerable elderly, there will be an earlier start, likely this month, of vaccination of A4 frontliners and others down the 12-tier list. Some thinking is being given to a simplified more simultaneous rollout, similar to Israel鈥檚 three-tiered system.
4.) As supplies build up and get used up, we need to overcome vaccine hesitation. Per the latest (February) Pulse Asia Survey, this is as high as 60% of the population. McDonald鈥檚 Managing Director and T3 Communications Lead Margot Torres is on top of a broad coalition which developed and are rolling out a compelling, even moving, Ingat Angat vaccination campaign some of us may have be seeing on media.
5.) If all goes well in the execution, we should achieve some form of 鈥渉erd immunity鈥 and thus greater mobility in the NCR by end November. The NCR with its 17 LGUs is, of course, the locus of the plague, and accounts for a substantial part of our country鈥檚 GDP. From there, the next roll out will be in the +6 provinces (Cavite, Laguna, Batangas, Rizal, Bulacan, Pampanga) and Metro Cebu and Davao. The thinking is that if case numbers are lowered in NCR+8 as a result of vaccinations, there will be less contamination throughout the country since the spread starts from these areas.
Stressing the importance of close monitoring and good execution for all these to happen, ADB Executive Director Paul Dominguez said that:
鈥 the plan appears doable but good execution and close monitoring is needed to address any problems or bottlenecks that emerge;
鈥 the private sector should engage with the LGUs where they do business to offer assistance as well as help replicate the vaccination plan developed for the NCR in other major cities and provinces.
Flagship Secretary and NTF Deputy Chief Implementor Vince Dizon ended the forum on a hopeful note:
鈥淚t鈥檚 been more than a year since T3 was formed to bring together the private and public sector in an unprecedented way to battle this pandemic. Our work has shown that working together brings in the best of both the private and government sector. Today, we saw again that working together will lead to the results that we need and what we want. With the leadership of Secretary Galvez, we now have the vaccines coming. And this was followed by Pepot鈥檚 (Mi帽ana) fantastic work in putting things in perspective with respect to deployment. Now is the time to execute and put this in action and we will heavily rely on the private sector. Finally, thank you to Margot (Torres), George (Royeca) and the team for communications because the challenge we face is demand generation. We have seen in other countries that demand generation is critical with the vaccination roll out, but with the beautiful and poignant ad that shows where we are and we are headed, we will get there and all enjoy a happier Christmas in 2021.鈥
I am writing this column, May 13, the day after the forum, as my family and our Muslim brothers and sisters are celebrating Eid Al Fitr, the end of Ramadan, a time of hope. I do so with the fervent wish that, Inshallah, we will have the 鈥渂etter Christmas鈥 that Presidential Peace Adviser Charlie Galvez envisions for us all.
Romeo L. Bernardo was finance undersecretary during the Cory Aquino and Fidel Ramos Administrations. He is a Trustee/Director of the Foundation for Economic Freedom, Management Association of the Philippines and FINEX Foundation
romeo.lopez.bernardo@gmail.com
