Sustainable recovery possible upon full economic reopening

MANILA, Philippines — Businesses will only be able to sustainably recover if the economy is fully opened and restrictions are lifted, Socioeconomic Planning Secretary Karl Chua said.

During the Senate hearing on the 2022 budget of the National Economic and Development Authority, Chua said the sustainable way of helping businesses rebound is by fully opening the economy.

“The idea of recovery is that we allow the businesses to operate. But we have not really allowed many businesses to operate given our heightened quarantine,” Chua said.

For nearly two years now, businesses and economic activities have yet to fully bounce back and recoup losses as restrictions remain in place in several areas and sectors.

The government also has the tendency to reimpose lockdown measures every time there is a surge in COVID cases.

Chua said this is also the reason why banks are more risk-averse in lending money to businesses.

“When they lend, they make sure that businesses will operate. So if we continue to have heightened quarantine, then there is a lot of hesitation and uncertainty,” Chua said.

“We have restricted businesses for more than 18 months. Once we are able to open, we will have this more virtuous cycle where those businesses needing financing or grants to support them will be provided by the financial sector,” he said.

Chua argued that if the government simply provides funds or stimulus while the economy remains restrictive, then it will just be a cycle of businesses not operating and tax revenues falling.

He said the government would have easily run out of money if the practice of providing financial aid or ayuda has been the go-to every time the economy shuts down.

“We provide the support, but the underlying necessary condition is the opening up of the economy. Otherwise, we will just be putting and lending money that people cannot actually turn around,” he said.

Still, Chua is opting to be more optimistic amid the sea of downgrades coming from international and local financial institutions and think tanks, the latest of which is the International Monetary Fund slashing economic growth forecast to 3.2 percent.

Chua said the country is seeing the light at the end of the tunnel as measures move away from wide-scale lockdowns and focus on the high risk areas. Mobility data also showed improvement even with the reimposition of lockdowns in August.

“Given more mobility, the economy would not see the same fate we saw last year. We have to continuously improve this over time,” he said.