Economists said 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.
In a virtual briefing, First Metro Investment Corp. chairman Francisco Sebastian said 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,” Sebastian said.
During the same briefing, University of Asia and the Pacific economist Dr. Bernardo Villegas said consumers are the most important sector of the economy because consumption accounts for about 70 percent of the country’s annual output.
“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 said.
He thus 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.
Another UA&P economist, Dr. Victor Abola, said he does not expect an economic recovery this year since this would depend “on how firms and the people respond to the opening up of the economy”.
Abola said while local Covid-19 cases are high, the death rate remains low and bulk of the cases are mild.
He said 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.
He said while the impact of putting up the necessary infrastructure would 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.