Fighting the pandemic of fear

August 13, 2020

STOP depending too much on the government’s stimulus program. That’s not how to help the economy recover.

Regaining consumer confidence and for people to go back to their pre-pandemic activities will play a big role in the economic recovery more than the government’s stimulus program.

Whether the government spends P160 billion or P1.3 trillion for its stimulus program, the difference will be the degree of pain that the people will have to bear over this time.

“But certainly, recovery will not be dependent on the stimulus. The stimulus is to assure ways to comfort, to supply necessary help for the people but the recovery will have to be a post-pandemic situation where there’s a new normal or a complete vaccine. So that’s how I look at it in the practical sense,” First Metro Investment Corporation (FMIC) chairman Francisco Sebastian said.

On the same page is University of Asia and the Pacific (UA&P) economist Dr. Bernardo Villegas.  Consumers are the most important sector of the economy because consumption accounts for about 70 percent of the country’s annual output, he explained.

He said “until Filipino consumers regain the confidence to go back to malls, to start travelling and spending, stimulus is going to be just an emergency solution to the problem.”
Villegas raised the need to address people’s fear to go out, which he termed as the “pandemic of fear.”

“Until fear disappears, you will have people very hesitant, even investors very hesitant. If interest rates are low, even if banks are willing to loan, but if people are not interested in spending, you will not have a recovery,” he added.

Also supporting this point of view is UA&P economist, Dr. Victor Abola. According to him,  he does not expect an economic recovery this year since this will depend “on how firms and the people respond to the opening up of the economy.”

He said while local COVID-19 cases are high, the death rate remains low and bulk of the cases are mild.

Businesses like mall operators should also make sure that they put in necessary health protocols like what is being done abroad, such as putting UV lights at the entry points to disinfect bags and clothes of mall goers.

People should also practice wearing masks and regularly wash their hands to help address the virus’ spread.

Meanwhile, Sebastian said the low interest rate regime in the country to date is a “kick in the butt" in terms of infrastructure spending.

While the impact of putting up the necessary infrastructure will be gained in about five to 10 years later “we have to look further out there.”

“You have to conquer the fear, you have to create confidence but we don’t want to break institutions. We don’t want to break our credit rating, we don’t want to overspend, we don’t want to be accused of spending habits that will haunt us in the future,” he added.

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